SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

                   Annual report pursuant to Section 13 of the
                         Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 1997

                          Commission File No.: 0-26744

                               PATRIOT BANK CORP.
             (exact name of registrant as specified in its charter)

                  DELAWARE                          23-2820537
(State or other jurisdiction of             (I.R.S. Employer I.D. No.)
incorporation or organization)

             High and Hanover Streets, Pottstown, Pennsylvania 19464
                    (Address of principal executive offices)

                         Registrant's telephone number,
                       including area code: (610) 323-1500
        Securities registered pursuant to Section 12(b) of the Act: None
          Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $0.01 per share
                                (Title of class)

The registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

         Yes _X_     No ___.

         Indicate by check mark if disclosure of delinquent filers
         pursuant to Item 405 of Regulation S-K is not contained
         herein, and will not be contained, to the best of the
         registrant's knowledge, in definitive proxy or information
         statements incorporated by reference in Part III of this
         Form 10-K or any amendment to this Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant, i.e., persons other than directors and executive officers of the
registrant is $66,001,803 and is based upon the last sales price as quoted on
The Nasdaq Stock Market for March 10, 1998.

As of March 10, 1998, the Registrant had 4,355,876 shares outstanding (excluding
treasury shares).


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                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's definitive Proxy Statement for the 1998 Annual
Meeting of Stockholders are incorporated by reference into Part III of this Form
10-K.


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                                      INDEX

PART I                                                                     PAGE
                                                                           ----

Item 1.    Business

Item 2.    Properties.

Item 3.    Legal Proceedings

Item 4.    Submission of Matters to a Vote of Security Holders

Item 4A.   Executive Officers of the Registrant

PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder
           Matters

Item 6.    Selected Financial Data

Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations

Item 7A.   Quantitative and Qualitative Disclosures About
           Market Risk

Item 8.    Financial Statements and Supplementary Data

Item 9.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure

PART III

Item 10.   Directors and Executive Officers of the
           Registrant

Item 11.   Executive Compensation

Item 12.   Security Ownership of Certain Beneficial
           Owners and Management

Item 13.   Certain Relationships and Related
           Transactions

PART IV

Item 14.   Exhibits, Financial Statement Schedules
           and Reports on Form 8-K

SIGNATURES

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Item 1.  Business

General

     Patriot Bank Corp. (the "Company") is a Delaware corporation and is the
holding company for Patriot Bank (the "Bank") and Patriot Investment Company
("PIC"). The Company is a bank holding company and is subject to regulation by
the Board of Governors of the Federal Reserve System (the "FRB"), the Federal
Deposit Insurance Corporation (the "FDIC") and the Securities and Exchange
Commission (the "SEC"). The Company's executive offices are located at the
administrative offices of the Bank at High and Hanover Streets, Pottstown,
Pennsylvania 19464.

     The Bank was originally chartered in 1938. In 1991, the Bank's predecessor
converted from a federally-chartered mutual savings bank to a
Pennsylvania-chartered mutual savings bank and changed its name to Patriot
Savings Bank. In August 1995, the Bank converted from a Pennsylvania-chartered
mutual savings bank to a federally-chartered mutual savings bank. On December 1,
1995, the Company acquired the Bank as part of the Bank's conversion from a
mutual to stock form of ownership (the "Conversion"). In connection with the
Conversion, the Bank changed its name to Patriot Bank. On May 23, 1997, the Bank
converted to a Pennsylvania-chartered commercial bank. The Bank conducts
business through its network of 13 community banking offices located in
Montgomery, Berks, Lehigh, Northampton and Chester Counties, Pennsylvania. The
Bank's deposits are insured up to the maximum allowable by the Savings Insurance
Fund ("SAIF") administered by the FDIC. At December 31, 1997, the Bank had total
assets of $809.1 million, deposits of $289.6 million and stockholder's equity of
$43.3 million.

     The Bank is a community-oriented financial services provider whose business
primarily consists of attracting retail deposits from the general public and
small businesses and originating commercial, consumer, and mortgage loans in the
Bank's market area. In addition to its lending activities, the Bank also invests
in investment and mortgage-backed securities. The Bank uses advances from the
Federal Home Loan Bank of Pittsburgh ("FHLB") and repurchase agreements as
sources of funds.

     The Bank's revenues are derived principally from interest on loans,
interest on investment and mortgage-backed securities and other fees and service
charges. The Bank's primary sources of funds are deposits, FHLB advances,
repurchase agreements, interest on loans and investment and mortgage-backed
securities and principal repayments.

     PIC is a Delaware investment corporation that was incorporated by the
Company on September 10, 1996. Its primary business consists of maintaining an
investment portfolio. At December 31, 1997, PIC had total assets of $49.7
million, liabilities of $26.5 million, and stockholder's equity of $23.2
million.


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Market Area and Competition

     The Company is located approximately 45 miles northwest of Philadelphia,
Pennsylvania and its market consists primarily of Montgomery, Berks, Lehigh,
Northampton, Bucks, and Chester counties, Pennsylvania. The segment of the
markets served by the Company is primarily industrially oriented and
demographically is comprised of middle income and upper income households.

     The Company faces significant competition both in originating loans and
attracting deposits. The Company's competitors are other financial services
providers operating within its primary market area, some of which are larger and
have greater financial resources than the Company. The Company's competition for
loans and deposits comes principally from commercial banks, savings and loan
associations, savings banks, credit unions, and mortgage banking companies (some
of which are subsidiaries of major financial institutions). In addition, the
Company faces increasing competition for deposits from non-bank institutions
such as brokerage firms and insurance firms with products such as money market
funds, mutual funds and annuities. Competition may increase as a result of the
continuing reduction in the effective restrictions on interstate operations of
financial institutions.

     Management considers the Company's reputation for financial strength,
superior customer service, convenience and product offerings as a competitive
advantage in attracting and retaining customers.

Subsidiary Activities

     The Company has two wholly-owned subsidiaries: The Bank and PIC. The Bank
has three wholly-owned subsidiaries: Marathon Management Company, Inc.
("Marathon"), Patriot Financial Center, Inc. ("PBFC"), and Patriot Commercial
Leasing Co., Inc. ("PCLC"). Marathon provides title insurance services through a
joint venture partnership. At December 31, 1997, Marathon had total assets of
$170,000. PBFC markets certain nondeposit investment products. At December 31,
1997, PBFC had total assets of $10,000. PCLC is a commercial leasing company. At
December 31, 1997, PCLC had total assets of $2.3 million.

Personnel

     As of December 31, 1997, the Bank had 133 full-time and 19 part-time
employees, none of whom was covered by a collective bargaining agreement.
Management believes that the Bank has good relations with its employees and
there are no pending or threatened labor disputes with its employees.

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Regulation and Supervision

     General. The Company, as a bank holding company, is required to file
certain reports with, and otherwise comply with the rules and regulations of the
FRB under the Bank Holding Company Act, as amended (the "BHCA"). In addition,
the activities of Pennsylvania-chartered commercial banks, such as the Bank, are
governed by the Pennsylvania Banking Code and the Federal Deposit Insurance Act
("FDI Act").

     The Bank is subject to extensive regulation, examination and supervision by
the Pennsylvania Department of Banking ("PDB"), as its primary regulator, and
the FDIC, as the deposit insurer. The Bank is a member of the Federal Home Loan
Bank ("FHLB") System and its deposit accounts are insured up to applicable
limits by the Savings Association Insurance Fund ("SAIF") managed by the FDIC.
The Bank must file reports with the PDB and the FDIC concerning its activities
and financial condition in addition to obtaining regulatory approvals prior to
entering into certain transactions such as mergers with, or acquisitions of,
other banking institutions. The PDB and/or the FDIC conduct periodic
examinations to test the Bank's safety and soundness and compliance with various
regulatory requirements. This regulation and supervision establishes a
comprehensive framework of activities in which an institution can engage and is
intended primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such regulatory requirements and policies, whether by the FRB, the
FDIC or the Congress, could have a material adverse impact on the Company, the
Bank and their operations. Certain of the regulatory requirements applicable to
the Bank and to the Company are referred to below or elsewhere herein. The
description of statutory provisions and regulations applicable to banking
institutions and their holding companies set forth in this Form 10-K does not
purport to be a complete description of such statutes and regulations and their
effects on the Bank and the Company.

     Holding Company Regulation. The Company is a bank holding company
registered under the BHCA. As a bank holding company, the Company's activities
and those of the Bank are limited to the business of banking and activities
closely related or incidental to banking.

     The BHCA prohibits a bank holding company, directly or indirectly, or
through one or more subsidiaries, from acquiring more than 5% of the voting
stock of another banking institution or holding company thereof, without prior
written approval of the FRB; acquiring or retaining, with certain exceptions,
more than 5% of a nonsubsidiary company engaged in activities other than

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those permitted by the BHCA; or acquiring or retaining control of a depository
institution that is not insured by the FDIC.

     Under FRB policy, a bank holding company is expected to act as a source of
financial strength to its subsidiary bank and to commit resources to support the
bank, i.e., to downstream funds to the bank. This support may be required at
times when, absent such policy, the bank holding company might not otherwise
provide such support. Any capital loans by a bank holding company to its
subsidiary bank are subordinate in right of payment to deposits and to certain
other indebtedness of the bank. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of its subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.

     Capital Requirements. The FRB adopted risk-based capital guidelines for
bank holding companies, such as the Company. The required minimum ratio of total
capital to risk-weighted assets (including off-balance sheet activities, such as
standby letters of credit) is 8.0%. At least half of the total capital is
required to be "Tier 1 capital," consisting principally of common stockholders'
equity, noncumulative perpetual preferred stock and minority interests in the
equity accounts of consolidated subsidiaries, less goodwill. The remainder
("Tier 2 capital") may consist of a limited amount of subordinated debt and
intermediate-term preferred stock, certain hybrid capital instruments and other
debt securities, perpetual preferred stock, and a limited amount of the general
loan loss allowance.

     In addition to the risk-based capital guidelines, the FRB established
minimum leverage ratio (Tier 1 capital to average total assets) guidelines for
bank holding companies. These guidelines provide for a minimum leverage ratio of
3% for those bank holding companies which have the highest regulatory
examination ratings and are not contemplating or experiencing significant growth
or expansion. All other bank holding companies are required to maintain a
leverage ratio of at least 1% to 2% above the 3% stated minimum. The Company is
in compliance with these guidelines. The Bank is subject to similar capital
requirements also adopted by the FRB.

     The risk-based capital standards are required to take adequate account of
interest rate risk, concentration of credit risk and the risks of
non-traditional activities.

     Under the FRB prompt corrective action regulations, the FRB is required to
take certain supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution's degree of undercapitalization.
Generally, a bank holding company is considered "well capitalized" if its ratio
of total capital to risk-weighted assets is at least 10%, its ratio of Tier I
(core) capital to risk-weighted assets is at least 6%, its ratio of core capital
to total assets is at least

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5%, and it is not subject to any order or directive by the FRB to meet a
specific capital level. A bank holding company generally is considered
"adequately capitalized" if its ratio of total capital to risk-weighted assets
is at least 8%, its ratio of Tier I (core) capital to risk-weighted assets is at
least 4%, and its ratio of core capital to total assets is at least 4% (3% if
the institution receives the highest CAMEL rating). A bank holding company that
has lower ratios of capital are categorized as "undercapitalized,"
"significantly under capitalized," or "critically undercapitalized." Subject to
a narrow exception, the banking regulator is required to appoint a receiver or
conservator for an institution that is "critically undercapitalized." The
regulation also provides that a capital restoration plan must be filed with the
FRB within 45 days of the date a bank receives notice that it is
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Compliance with the plan must be guaranteed by any parent
holding company. In addition, numerous mandatory supervisory actions become
immediately applicable to an undercapitalized institution, including, but not
limited to, increased monitoring by regulators and restrictions on growth,
capital distributions and expansion. The FRB could also take any one of a number
of discretionary supervisory actions, including the issuance of a capital
directive and the replacement of senior executive officers and directors. At
December 31, 1997, the Company was "well capitalized."

     Insurance of Deposit Accounts. Deposits of the Bank are presently insured
by the SAIF. Both the SAIF and the Bank Insurance Fund ("BIF"), (the deposit
insurance fund that covers most commercial bank deposits), are statutorily
required to maintain a 1.25% of insured reserve deposits ratio. Both the BIF and
the SAIF currently exceed the 1.25% ratio. Therefore, most institutions,
including the Bank, presently pay no deposit insurance premiums. The FDIC must
assess deposit insurance premiums if the 1.25% ratio is not met, and may impose
premiums on under capitalized or unsafe institutions.

     While most banks do not pay deposit insurance, all institutions are
assessed for payment of the FICO bonds. Through 1999, BIF deposits are assessed
for FICO payments at a rate that is one-fifth of the rate assessed on SAIF
deposits. Full pro rata sharing of the FICO payments between BIF and SAIF
members will occur on the earlier of January 1, 2000 or the date the BIF and
SAIF are merged. The FDIC resets the FICO assessment rate every six months. The
current annual rate is 1.26 basis points for BIF deposits, and 6.3 basis points
for SAIF deposits.

     Under the FDI Act, insurance of deposits may be terminated by the FDIC upon
a finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC. The

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management of the Bank does not know of any practice, condition or violation
that might lead to termination of deposit insurance.

     Loans to One Borrower. Applicable regulations limit the dollar amount of
loans that the Bank may have outstanding to any one borrower, or group of
affiliated borrowers, to 15% of the capital and surplus of the Bank. As of
December 31, 1997, this limitation was equal to $6.5 million. There are
exceptions from the limitation for certain secured loans, depending upon the
amount and type of collateral.

     Limitation on Capital Distributions. Dividend payments by the Bank to the
Company are subject to the Pennsylvania Banking Code of 1965, the Federal
Reserve Act, and the FDI Act. Under the Pennsylvania Banking Code, no dividends
may be paid except from "accumulated net earnings" (generally, undivided
profits). Under the FDI Act, no dividends may be paid by an insured bank if the
bank is in arrears in the payment of any insurance assessment due to the FDIC.
Under current banking laws, the Bank would be limited to approximately $17.9
million of dividends in 1998 plus an additional amount equal to the Bank's net
profit for 1998, up to the date of any such dividend declaration.

     State and federal regulatory authorities have adopted standards for the
maintenance of adequate levels of capital by banks. Adherence to such standards
further limits the ability of the Bank to pay dividends to the Company.

     Interstate Banking. The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking Law"), amended various federal
banking laws to provide for nationwide interstate banking, interstate bank
mergers and interstate branching. The interstate banking provisions allow for
the acquisition by a bank holding company of a bank located in another state.

     Interstate bank mergers and branch purchase and assumption transactions
were allowed effective June 1, 1997; however, states were permitted to "opt-out"
of the merger and purchase and assumption provisions by enacting a law which
specifically prohibited such interstate transactions. States could have, in the
alternative, enacted legislation to allow interstate merger and purchase and
assumption transactions prior to June 1, 1997. States could also enact
legislation to allow for de novo interstate branching by out of state banks. In
July 1995, Pennsylvania adopted "opt-in" legislation which allows such
transactions.

     Transactions with Related Parties. The Bank's authority to engage in
transactions with related parties or "affiliates" (e.g., any company that
controls or is under common control with an institution, including the Company
and its non-savings institution subsidiaries) is limited by Sections 23A and 23B
of

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the Federal Reserve Act ("FRA"). Section 23A limits the aggregate amount of
covered transactions with any individual affiliate to 10% of the capital and
surplus of the Bank. The aggregate amount of covered transactions with all
affiliates is limited to 20% of the Bank's capital and surplus. Certain
transactions with affiliates are required to be secured by collateral in an
amount and of a type described in Section 23A and the purchase of low quality
assets from affiliates is generally prohibited. Section 23B generally provides
that certain transactions with affiliates, including loans and asset purchases,
must be on terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies. In addition, banks are prohibited from lending to any affiliate that
is engaged in activities that are not permissible for bank holding companies and
no bank may purchase the securities of any affiliate other than a subsidiary.

     The Bank's authority to extend credit to executive officers, directors and
10% shareholders ("insiders"), as well as entities such persons control, is
governed by Sections 22(g) and 22(h) of the FRA and Regulation O thereunder.
Among other things, such loans are required to be made on terms substantially
the same as those offered to unaffiliated individuals and to not involve more
than the normal risk of repayment. Recent legislation created an exception for
loans made pursuant to a benefit or compensation program that is widely
available to all employees of the institution and does not give preference to
insiders over other employees. Regulation O also places individual and aggregate
limits on the amount of loans the Bank may make to insiders based, in part, on
the Bank's capital position and requires certain board approval procedures to be
followed.

     Enforcement. Under the FDI Act, the FDIC has primary enforcement
responsibility over state nonmember banks and has the authority to bring actions
against the institution and all institution-affiliated parties, including
stockholders, and any attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on an
insured institution. Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of officers and/or
directors to institution of receivership, conservatorship or termination of
deposit insurance. Civil penalties cover a wide range of violations and can
amount to $25,000 per day, or even $1 million per day in especially egregious
cases. Federal law also establishes criminal penalties for certain violations.

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Standards for Safety and Soundness. The federal banking agencies have adopted
Interagency Guidelines Prescribing Standards for Safety and Soundness
("Guidelines") and a final rule to implement safety and soundness standards
required under the FDI Act. The Guidelines set forth the safety and soundness
standards that the federal banking agencies use to identify and address problems
at insured depository institutions before capital becomes impaired. The
standards set forth in the Guidelines address internal controls and information
systems; internal audit system; credit underwriting; loan documentation;
interest rate risk exposure; asset growth; and compensation, fees and benefits.
If the appropriate federal banking agency determines that an institution fails
to meet any standard prescribed by the Guidelines, the agency may require the
institution to submit to the agency an acceptable plan to achieve compliance
with the standard, as required by the FDI Act. The final rule establishes
deadlines for the submission and review of such safety and soundness compliance
plans when such plans are required.

Federal Reserve System. The Federal Reserve Board regulations require savings
institutions to maintain non-interest earning reserves against their transaction
accounts (primarily NOW and regular checking accounts). During fiscal 1997, the
Federal Reserve Board regulations generally required that reserves be maintained
against aggregate transaction accounts as follows: for accounts aggregating
$47.8 million or less (subject to adjustment by the Federal Reserve Board) the
reserve requirement is 3%; and for accounts aggregating greater than $47.8
million, the reserve requirement is $1.434 million plus 10% (subject to
adjustment by the Federal Reserve Board between 8% and 14%) against that portion
of total transaction accounts in excess of $47.8 million. The first $4.7 million
of otherwise reservable balances (subject to adjustments by the Federal Reserve
Board) were exempted from the reserve requirements. The Bank is in compliance
with the foregoing requirements. The balances maintained to meet the reserve
requirements imposed by the Federal Reserve Board may be used to satisfy
liquidity requirements imposed by the FDIC.

Federal and State Taxation

Federal Taxation

     General. The Company and its subsidiaries report their income on a
consolidated basis using the accrual method of accounting, and are subject to
federal income taxation in the same manner as other corporations with some
exceptions, including particularly the Bank's reserve for bad debts discussed
below. The following discussion of tax matters is intended only as a summary and
does not purport to be a comprehensive description of the tax rules applicable
to the Company. For its 1997 taxable year, the Company is subject to a maximum
federal income tax rate of 35%.

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     Bad Debt Reserves. As a commercial bank, the Bank is permitted to recognize
bad debt expense based on actual experience. Prior to its conversion to a
commercial bank in May 1997, the Bank was a thrift institution. For fiscal years
beginning prior to December 31, 1995, thrift institutions which qualified under
certain definitional tests and other conditions of the Internal Revenue Code of
1986 (the "Code") were permitted to use certain favorable provisions to
calculate their deductions from taxable income for annual additions to their bad
debt reserve. A reserve could be established for bad debts on qualifying real
property loans (generally secured by interests in real property improved or to
be improved) under (i) the Percentage of Taxable Income Method (the "PTI
Method") or (ii) the Experience Method. The reserve for nonqualifying loans was
computed using the Experience Method.

     The Small Business Job Protection Act of 1996 (the "1996 Act") requires
savings institutions to recapture (i.e., take into income) certain portions of
their accumulated bad debt reserves. The 1996 Act repeals the reserve method of
accounting for bad debts effective for tax years beginning after 1995. Thrift
institutions that would be treated as small banks are allowed to utilize the
Experience Method applicable to such institutions, while thrift institutions
that are treated as large banks (those generally exceeding $500 million in
assets) are required to use only the specific charge-off method. Thus, the PTI
Method of accounting for bad debts is no longer available for any financial
institution.

     A thrift institution required to change its method of computing reserves
for bad debts will treat such change as a change in method of accounting,
initiated by the taxpayer, and having been made with the consent of the IRS. Any
Section 481(a) adjustment required to be taken into income with respect to such
change generally will be taken into income ratably over a six-taxable year
period, beginning with the first taxable year beginning after 1995, subject to
the residential loan requirement.

     Under the residential loan requirement provision, the recapture required by
the 1996 Act will be suspended for each of two successive taxable years,
beginning with the Bank's current taxable year, in which the Bank originates a
minimum of certain residential loans based upon the average of the principal
amounts of such loans made by the Bank during its six taxable years preceding
its current taxable year.

     Under the 1996 Act, for its current and future taxable years, the Bank is
permitted to make additions to its tax bad debt reserves. In addition, since the
Banks tax bad debt reserves as of December 31, 1987 exceeded its tax bad debt
reserves as of December 31, 1995 it is not required to recapture any income.

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     Distributions. Under the 1996 Act, if the Bank makes "non-dividend
distributions" to the Company, such distributions will be considered to have
been made from the Bank's unrecaptured tax bad debt reserves (including the
balance of its reserves as of December 31, 1987) to the extent thereof, and then
from the Bank's supplemental reserve for losses on loans, to the extent thereof,
and an amount based on the amount distributed (but not in excess of the amount
of such reserves) will be included in the Bank's income. Non-dividend
distributions include distributions in excess of the Bank's current and
accumulated earnings and profits, as calculated for federal income tax purposes,
distributions in redemption of stock, and distributions in partial or complete
liquidation. Dividends paid out of the Bank's current or accumulated earnings
and profits will not be so included in the Bank's income.

     The amount of additional taxable income triggered by a non-dividend is an
amount that, when reduced by the tax attributable to the income, is equal to the
amount of the distribution. Thus, if the Bank makes a non-dividend distribution
to the Company, approximately one and one-half times the amount of such
distribution (but not in excess of the amount of such reserves) would be
includable in income for federal income tax purposes, assuming a 35% federal
corporate income tax rate. The Banks does not intend to pay dividends that would
result in a recapture of any portion of its bad debt reserves.

     Corporate Alternative Minimum Tax. The Internal Revenue Code of 1986, as
amended (the "Code") imposes a tax on alternative minimum taxable income
("AMTI") at a rate of 20%. The excess of the tax bad debt reserve deduction
using the percentage of taxable income method over the deduction that would have
been allowable under the experience method is treated as a preference item for
purposes of computing the AMTI. Only 90% of AMTI can be offset by net operating
loss carryovers. AMTI is increased by an amount equal to 75% of the amount by
which the Bank's adjusted current earnings exceeds its AMTI (determined without
regard to this preference and prior to reduction for net operating losses). In
addition, for taxable years beginning after December 31, 1986 and before January
1, 1996, an environmental tax of .12% of the excess of AMTI (with certain
modifications) over $2.0 million is imposed on corporations, including the Bank,
whether or not an Alternative Minimum Tax ("AMT") is paid. The Bank does not
expect to be subject to the AMT, but may be subject to the environmental tax
liability.

     Dividends Received Deduction and Other Matters. The Company may exclude
from its income 100% of dividends received from the Bank as a member of the same
affiliated group of corporations. The corporate dividends received deduction is
generally 70% in the case of dividends received from unaffiliated corporations
with which the Company and the Bank will not file a consolidated tax return,
except that if the Company owns more than 20% of the

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stock of a corporation distributing a dividend, 80% of any
dividends received may be deducted.

State Taxation

     Commonwealth of Pennsylvania. Prior to the Bank's conversion to a
Pennsylvania chartered commercial bank, the Bank was subject to the Mutual
Thrift Institutions Tax ("MTIT"), an excise tax imposed on certain financial
institutions (including savings institutions having capital stock) for the
privilege of doing business in Pennsylvania. The MTIT equals 11.5% of an
institution's "annual taxable net income" determined in accordance with
generally accepted accounting principles with certain modifications. Financial
institutions subject to the MTIT are exempt from all other corporate taxes
imposed by Pennsylvania.

     The Bank is now subject to a "Bank Shares Tax" which is imposed on every
bank having capital stock located within Pennsylvania. The Bank Shares Tax is
based on the value of the bank's shares as of the preceding January 1st. The
taxable amount is computed by adding the book value of capital stock paid in,
the book value of the surplus and the book value of undivided profits, and then
deducting from that total an amount equal to the percentage that the book value
of the bank's federal obligations and state obligations bears to the book value
of the bank's total assets. This value is calculated on the basis of the current
year and the preceding five years, but, if a bank has not been in existence for
six years, the taxable amount is computed by adding the value for the number of
years that the bank has been in existence and dividing the resulting sum by that
number of years. The Bank Shares Tax rate is 1.25% of the taxable amount. Banks
subject to the Bank Shares Tax are exempt from all other corporate taxes imposed
by Pennsylvania.

     Corporations doing business in Pennsylvania and not subject to the MTIT or
Bank Shares Tax are subject to Pennsylvania Corporate Net Income Tax ("CNIT").
The CNIT is an annual excise tax and is measured by the Corporation's taxable
income as determined under the Code. When a domestic or foreign corporation's
entire business is not transacted wholly within Pennsylvania, such taxable
income must allocated and apportioned to determine that portion subject to the
CNIT. The CNIT rate is 9.99%. Pennsylvania also subjects such corporations to
the Pennsylvania Capital Stock and Franchise Tax.

     At the start of 1997, the Bank was subject to the MTIT. After the Bank's
conversion to a Pennsylvania-chartered commercial bank, the Bank ceased to be
subject to the MTIT and the Bank will file its final MTIT return. The Bank is
now subject to the Bank Shares Tax. The January 1st share value of the Bank may
be averaged to include preceding years if Pennsylvania treats the conversion
consistent with a foreign corporation commencing business in Pennsylvania.

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     The Company is subject to the Pennsylvania CNIT and the Pennsylvania
Capital Stock and Franchise Tax because it is a foreign corporation doing
business in Pennsylvania. The Company's Pennsylvania CNIT is calculated on an
unconsolidated basis and adjusted to reflect the appropriate allocation and
apportionment requirements. The Company is not subject to the MTIT or Bank
Shares Tax.

     State of Delaware Taxation. The Delaware Tax Code excludes from Delaware
corporate income taxation any corporation which limits its activities to the
maintenance and management of intangible investments within the State of
Delaware. This exception for Delaware "holding companies" applies to the Company
as long as its sole activity in the State of Delaware is the maintenance and
management of its subsidiary investments including the Bank and PIC. The Company
is, however, required to file annual reports and pay fees to the State of
Delaware. PIC is not subject to Delaware corporate income tax as an investment
company.

Item 2. Properties

     The Bank has 13 banking offices, three (3) of which are located in
Montgomery County, four (4) of which are located in Berks County, three (3) of
which are located in Lehigh County, one (1) of which is located in Northampton
County, one (1) which is located in Chester County, and one (1) of which is
located in Bucks County, Pennsylvania. The Bank owns 6 and leases 7 of the
banking office properties.

Item 3. Legal Proceedings

     The Company is a defendant in various legal actions arising from normal
business activities. Management believes that those actions are either without
merit or that the ultimate liability, if any, resulting from such actions will
not have a material adverse effect on the Company's consolidated financial
position or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

Item 4A. Executive Officers of the Registrant

     Certain information, including principal occupation during the past five
years, relating to the principal executive officers of the Company, as of March
10, 1998, is set forth below:

          Gary N. Gieringer - Age 57. Mr. Gieringer was elected Chairman of the
     Board and Chief Executive Officer of the Company in August 1995. Prior
     thereto, Mr. Gieringer served as President and Chief Executive Officer of
     the Bank.

                                       12

<PAGE>



          Joseph W. Major - Age 42. Mr. Major was elected President and Chief
     Operating Officer of the Company and the Bank in September 1995 and Chief
     Executive Officer of the Bank in April 1997. Prior to his appointment at
     the Company and the Bank, Mr. Major was a partner in the firm of Mauger &
     Major.

          Richard A. Elko - Age 36. Mr. Elko was elected Executive Vice
     President and Chief Financial Officer of the Company and the Bank in
     January 1996. Prior to his appointment at the Company and the Bank, Mr.
     Elko was Corporate Controller at Sovereign Bancorp, Inc.

          Robert G. Phillips - Age 46. Mr. Phillips was elected Treasurer of the
     Company and the Bank in August 1995. Prior thereto, Mr. Phillips was
     Treasurer of the Bank.

          Paulette A. Strunk - Age 48. Ms. Strunk was elected Corporate
     Secretary of the Company and the Bank in September 1995. Prior thereto, Ms.
     Strunk was Vice President of the Bank.

                                       13

<PAGE>



                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

     The Company's common stock is traded in the over-the-counter market and is
quoted on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") National Market System under the symbol "PBIX." At March 10,
1998, the total number of holders of record of the Company's common stock was
563.

     The following table sets forth the high and low bid and asked information
of the Company's common stock to the extent available as reported by NASDAQ.
Such prices have been adjusted to reflect all stock dividends paid during 1996
and 1997.

<TABLE>
<CAPTION>

                            1996                                                    1997
                  Bid                  Asked                               Bid                 Asked
-----------------------------------------------------      -------------------------------------------------
   Qtr       High       Low       High       Low           Qtr      High       Low       High       Low
-----------------------------------------------------      -------------------------------------------------

   <S>       <C>        <C>       <C>        <C>           <C>      <C>        <C>       <C>        <C>  
   1st        8-55/64    8-1/2     9-1/32     8-55/64      1st      13-21/64   10-47/64  14-1/6     11-1/4
   2nd        8-15/16    8-11/16   9-7/64     8-55/64      2nd      14-31/64   11-7/8    14-57/64   12-19/64
   3rd       10-21/64    8-55/64  10-1/2      8-15/16      3rd      18-1/2     14-31/64  19-1/8     14-51/64
   4th       11-3/8     10-1/16   11-35/64   10-21/64      4th      20-3/4     16-1/2    21-1/4     16-3/4

</TABLE>

The bid quotations reflect interdealer quotations, do not include retail mark
ups, mark downs or commissions,and may not necessarily represent actual
transactions. The bid information as stated is, to the knowledge of management
of the Company, the best approximate value at the time indicated.

Dividend Information.

     Dividends on the Company's common stock are generally payable in February,
May, August, and November.

     Set forth below are the cash dividends paid by the Company during 1996 and
1997. Such dividends have been adjusted to reflect all stock dividends paid
during such years.

                        1997                1996
                        ----                ----

First Quarter           $.069               $.013
Second Quarter          $.073               $.042
Third Quarter           $.077               $.056
Fourth Quarter          $.079               $.067

     For certain limitations on the ability of the Bank to pay dividends to the
Company, See Part I, Item I "Business -- Regulation and Supervision -- 
Limitation on Capital Distributions" and Note 11 at Item 8 "Financial Statements
and Supplementary Data" hereof.

                                       14

<PAGE>


Item 6. Selected Financial Data

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The selected consolidated financial and other data and management's discussion
and analysis set forth below is derived in part from, and should be read in
conjunction with, the Consolidated Financial Statements and Notes thereto,
contained elsewhere herein.

<TABLE>
<CAPTION>
                                                                     At December 31,
                                          --------------------------------------------------------------------
                                            1997           1996           1995           1994           1993
                                          --------       --------       --------       --------       --------
                                                                     (in thousands)
<S>                                      <C>            <C>            <C>            <C>            <C>
Selected Financial Condition Data:

Total assets                              $851,500       $529,165       $268,869       $221,035       $221,895
Investment and mortgage-backed
securities available for sale(1)           343,125        159,148         47,646         33,025             --
Investment and mortgage-backed
securities held to maturity(1)              62,516         72,710          3,917          8,669         34,436
Loans held for sale                          4,095             --             --             --             --
Loans receivable                           422,209        280,184        194,250        168,974        161,529
Allowance for possible loan losses          (2,512)        (1,830)        (1,702)        (1,720)        (1,665)
Deposits                                   289,528        239,514        201,618        189,938        198,876
Borrowings                                 508,301        231,595         10,000         10,000          2,000
Stockholders' equity                        46,533         53,117         54,110         17,868         17,517


                                                                For Year Ended December 31,
                                          --------------------------------------------------------------------
                                            1997           1996           1995           1994           1993
                                           -------       --------       --------       --------       --------
                                                                     (in thousands)
Selected Operating Data:

Interest Income                            $50,249        $29,594        $17,168        $15,498        $17,361
Interest Expense                            35,807         17,502          9,549          8,125          9,628
                                            ------         ------          -----          -----          -----

Net interest income before provision
for possible loan losses                    14,442         12,092          7,619          7,373          7,733
Provision for possible loan losses             915            305             60             56              1
                                            ------          -----          -----          -----          -----

Net interest income after provision
for possible loan losses                    13,527         11,787          7,559          7,317          7,732
Non-interest income                          2,330            637            518            674          1,496
Non-interest expense                        11,158          9,198          6,151          6,090          5,451
                                            ------          -----          -----          -----          -----

Income before income taxes                   4,699          3,226          1,926          1,901          3,777
Income taxes                                 1,326          1,251            734            717          1,460
                                            ------          -----          -----          -----          -----
Net income                                  $3,373         $1,975         $1,192         $1,184         $2,317
                                            ======         ======         ======         ======         ======

Earnings per share - diluted(2)             $0.741         $0.387
                                            ======         ======
Net income before special charge(3)                        $2,811
                                                           ======
Earnings per share - diluted
before special charge(2)(3)                                $0.551
                                                           ======
</TABLE>


                                       15
<PAGE>


SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA, CONTINUED

<TABLE>
<CAPTION>

                                                                      At December 31,
                                           -------------------------------------------------------------------
                                              1997          1996           1995           1994           1993
                                           ---------       -------        ------         ------         ------
<S>                                          <C>            <C>            <C>            <C>            <C>
Performance Ratios(4):

Return on Average Assets                      0.49%          0.48%          0.50%          0.54%          0.99%
Return on Average Assets
before special charge(3)                        --           0.68             --             --             --
Return on Average Equity                      7.22           3.71           5.40           6.59          13.61
Return on Average Equity
before special charge(3)                        --           5.28             --             --             --
Average interest rate spread(5)               2.10           2.95           3.29           3.33           3.31
Net interest margin(6)                        2.14           3.01           3.39           3.45           3.43
Average interest-earning
assets to average
interest bearing liabilities                104.90         113.69         109.20         107.16          106.9
Total non-interest expense to
average assets(10)                            1.56           1.93           2.65           2.75           2.34
Dividend payout ratio(2)                     40.31          45.91             --             --             --

Regulatory Capital Ratios(7):

Tier 1 capital to
average assets(8)                             7.90%          9.97%         20.14%          8.46%          7.89%
Total risk adjusted capital to
risk-adjusted assets(8)                      12.92          20.28          34.27          13.98          13.61
Tier 1 capital to
risk-adjusted assets(8)                      14.54          20.98          35.35          15.33          14.90

Asset Quality Ratios(9):

Non-performing assets as a percent
of total assets                               0.15           0.12           0.29           0.45           0.64
Non-performing  assets as a percent
of loans receivable                           0.26           0.20           0.30           0.43           0.53
Allowance for possible loan
losses as a percent of
loans receivable                              0.59           0.65           0.88           1.01           1.02
Allowance for possible loan
losses as a percent of
non-performing loans                        225.90         321.94         292.94         234.94         190.94
</TABLE>


                                       16
<PAGE>


SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA, CONTINUED


(1)    Effective January 1, 1994, Patriot adopted SFAS No. 115 and classified
       $3,341,000 of investment and mortgage-backed securities as held to
       maturity, $31,095,000 of investment and mortgage-backed securities as
       available for sale and no securities as trading securities.

(2)    Patriot completed its initial public offering on December 1, 1995.
       Therefore, earnings per share and dividend payout ratio are not
       applicable for years prior to 1996.

(3)    Special charge representing the special deposit insurance assessment
       levied against all SAIF member financial institutions by the FDIC to
       recapitalize its SAIF fund.

(4)    All ratios are based on average monthly balances during the indicated
       periods.

(5)    The average interest rate spread represents the difference between the
       weighted average yield on total assets and the weighted average cost of
       total liabilities and equity.

(6)    The net interest margin represents tax-equivalent net interest income as
       a percent of average interest-earning assets.

(7)    For definitions and further information relating to regulatory capital
       requirements, see footnote 14 of the consolidated financial statements.

(8)    Regulatory capital ratios for 1996 and years prior are calculated under
       OTS guidelines, current year ratios are calculated using FDIC guidelines
       due to the conversion to a state chartered commercial bank

(9)    Non-performing assets consist of non-performing loans and real estate
       owned (REO). Non-performing loans consist of non-accrual loans, while REO
       consists of real estate acquired through foreclosure and real estate
       acquired by acceptance of a deed in lieu of foreclosure.

(10)   Calculated prior to special charge, representing the special deposit
       insurance assessment levied against all SAIF member financial
       institutions by the FDIC to recapitalize its SAIF fund.


                                       17
<PAGE>


Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

In addition to historical information, this discussion and analysis of Patriot
Bank Corp. and Subsidiaries (Patriot) contains forward-looking statements. The
forward-looking statements contained herein are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected in the forward-looking statements. Important factors that might cause
such a difference include, but are not limited to, those discussed in the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only as of the
date hereof. Patriot undertakes no obligation to publicly revise or update these
forward-looking statements to reflect events or circumstances that arise after
the date hereof.

Summary. For the year ended December 31, 1997, Patriot reported net income of
$3,373,000 or $.74 per share compared to net income of $1,975,000 or $.39 per
share for the tear ended December 31, 1996. This represents an increase in net
income of 71% and an increase in earnings per share of 90%. Return on average
equity was 7.22% for 1997 compared to 3.71% for 1996.

The 1996 results include a special after-tax charge of $836,000 ($1,338,000
before-tax) representing the special deposit insurance assessment levied against
all SAIF member financial institutions by the FDIC to recapitalize its SAIF
fund. Excluding the special charge, Patriot reported net income of $2,811,000 or
$.55 per share for 1996.

Stock Conversion. Patriot became a publicly owned company on December 1, 1995
when it issued 3,769,125 shares of common stock to the public and raised net
proceeds of $36,652,000.

Stock Dividends. On September 22, 1997 and November 21, 1996 Patriot paid
special 20% stock dividends to its shareholders. For comparative purposes, per
share amounts, as presented herein, have been adjusted to reflect these stock
dividends.

Charter Conversion. On May 22, 1997, Patriot Bank completed its conversion from
a federally chartered savings bank to a state chartered commercial bank. The
charter conversion had no significant impact on the financial condition or
results of operation of Patriot.

Capital Transactions. On June 5, 1997 Patriot issued $19 million of 10.30% trust
preferred securities. The trust preferred securities, subject to certain
limitations, qualify as tier 1 capital for regulatory purposes. During 1997
Patriot repurchased a total of 1,042,000 shares of its common stock at a total
cost of $13,554,000.

Deposit Sale. On November 21, 1997, Patriot completed the sale of $10,350,000 of
deposits and a branch office. Patriot received a 7.5% premium on the deposits
and recognized a net gain of $885,000.

Year 2000 Compliance. Pursuant to its strategic business plan, Patriot has made
significant investments in new technology over the last two years. As a result
of these investments, the primary systems used by Patriot are currently Year
2000 compliant. Management has initiated a comprehensive program to analyze and
proactively plan for ensuring all of Patriot's systems are year 2000 compliant.
It is currently anticipated that certain secondary systems will require
modification. The cost of these modifications is expected to be minimal.

Net Interest Income. Net interest income for 1997 was $14,442,000 compared to
$12,092,000 in 1996. This represents an increase of 19% and is primarily due to
an increase in average balances. Average balances increased throughout 1997 as
Patriot grew its assets to more fully utilize the capital raised in the stock
conversion. Much of Patriot's asset growth resulted from the origination of
commercial, consumer and mortgage loans. Additionally, Patriot purchased
investment and mortgage-backed securities. Most of the investment and
mortgage-backed securities purchased either have short average lives (five years
or less) or have adjustable rates. Patriot's asset growth was funded through
deposit growth and borrowings.

As a result of these growth strategies the stock repurchases and the issuance of
the trust preferred securities. Patriot's net interest margin (net interest
income as a percentage of average interest-earning assets) decreased as
anticipated to 2.14% from 3.01% in 1996.

                                       18
<PAGE>

Interest on loans was $27,008,000 for 1997 compared to $18,429,000 for 1996. The
average balance of loans was $348,186,000 with an average yield of 7.76%
compared to an average balance of $234,726,000 with an average yield of 7.85%
for 1996. The increase in average balance is due to an emphasis placed on
commercial loans, residential mortgage loans and home equity loans during 1997.
The decrease in average yield is primarily a result of an emphasis on short-term
and adjustable-rate loans many of which are originated with teaser rates.

Interest on Patriot's investment portfolio (investment and mortgage-backed
securities) was $23,048,000 for 1997 compared to $11,409,000 in 1996. The
average balance of the investment portfolio was $336,718,000 with an average
yield of 6.96% for 1997 compared to an average balance of $165,159,000 with an
average yield of 6.69% for 1996. The increase in average balance and the
increase in average yield was due to the purchase of higher yielding investment
and mortgage-backed securities. The majority of securities purchased in 1997
were adjustable rate collateralized mortgage obligations with interest rates
tied to one month LIBOR.

Interest on total deposits was $13,405,000 for 1997 compared to $9,895,000 for
1996. The average balance of total deposits was $275,811,000 with an average
cost of 4.86% for 1997 compared to an average balance of $218,364,000 with an
average cost of 4.53% for 1996. The increase in average balance was the result
of aggressive marketing of money market and other transaction-based deposit
accounts, the opening of two new community banking offices and an increase in
Patriot's jumbo deposit program offset somewhat by the deposit sale. The
increase in average yield was the result of a higher percentage of jumbo
deposits offset by the emphasis on transaction-based deposit accounts.

Interests on borrowings was $22,402,000 in 1997 compared to $7,607,000 in 1996.
The average balance of borrowings was $382,357,000 with an average cost of 5.86%
for 1997 compared to an average balance of $136,200,000 with an average cost of
5.57% for 1996. The increase in average balance was due to the use of borrowings
to fund the growth in the balance sheet. The increase in average cost was due to
higher balances of long-term borrowings and due to the issuance of the trust
preferred securities.

                                       19

<PAGE>


Spread Analysis. The following table sets forth Patriot's average balances and
the yields on those balances for the years ended December 31, 1997, 1996 and
1995. The yields and costs are derived by dividing income or expense by the
average balance of assets or liabilities, respectively, for the periods shown,
except where noted otherwise. The yields and costs include fees which are
considered adjustments to yields.

<TABLE>
<CAPTION>
                                                                 For the Year Ended December 31,
                               --------------------------------------------------------------------------------------------------
                                            1997                               1996                              1995
                               ------------------------------     -----------------------------      ----------------------------
                               Average                Yield/      Average                Yield/      Average               Yield/
                               Balance    Interest     Rate       Balance    Interest     Rate       Balance   Interest     Rate
                               -------    --------    ------      -------    --------    ------      -------   --------    ------
                                                                         (In thousands)
<S>                           <C>          <C>         <C>       <C>          <C>         <C>       <C>         <C>         <C>
Assets:

Interest-earning assets:
Interest-earning deposits     $  5,522     $   193     3.49%     $  3,207     $   116     3.62%     $  4,719    $   201     4.26%
Investment and mortgage-
  backed securities(1)         336,718      23,048     6.96       165,159      11,049     6.69        46,802      2,865     6.12
Loans receivable, net(2)       348,186      27,008     7.76       234,726      18,429     7.85       173,020     14,102     8.15
                              --------     -------     ----      --------     -------     ----      --------    -------     ----

Net interest-earning assets    690,426      50,249     7.34       403,092      29,594     7.34       224,541     17,168     7.65
Non-interest-earning assets     16,635          --       --         7,018          --       --         7,248         --       --
                              --------     -------     ----      --------     -------     ----      --------    -------     ----

Total assets                  $707,061     $50,249     7.16      $410,110     $29,594     7.22      $231,789    $17,168     7.41
                              ========     =======     ----      ========     =======     ----      ========    =======     ====
Liabilities and Equity:

Interest-bearing liabilities:
Savings deposits              $ 93,902     $ 2,632     2.80      $ 82,354     $ 2,120     2.57      $ 78,004    $ 2,083     0.03
Certificates Of Deposits       181,909      10,773     5.92       136,010       7,775     5.72       118,494      6,897     5.82
                              --------     -------     ----      --------     -------     ----      --------    -------     ----

Total deposits                 275,811      13,405     4.86       218,364       9,895     4.53       196,498      8,980     4.57
Borrowings(3)                  382,357      22,402     5.86       136,200       7,607     5.57         9,126        569     6.23
                              --------     -------     ----      --------     -------     ----      --------    -------     ----

Total interest-bearing
  liabilities                  658,168      35,807     5.44       354,564      17,502     4.94       205,624      9,549     4.64
Non-interest-bearing
  liabilities                    2,188          --       --         2,300          --       --         4,069         --       --
                              --------     -------     ----      --------     -------     ----      --------    -------     ----

Total liabilities              660,356      35,807     5.42       356,864      17,502     4.90       209,693      9,549     4.55
Equity                          46,705          --       --        53,246          --       --        22,096         --       --
                              --------     -------     ----      --------     -------     ----      --------    -------     ----

Total liabilities and equity  $707,061      35,807     5.06      $410,110     $17,502     4.27      $231,789    $ 9,549     4.12
                              ========     =======     ----      ========     =======     -----     ========    =======     ----

Net interest rate spread(4)                            2.10%                              2.95%                             3.29%
                                                       ====                               ====                              ==== 

Net interest margin(5)                                 2.14%                              3.01%                             3.39%
Ratio of interest-earning
  assets to interest-bearing
  liabilities                   104.90%                            113.69%                            109.20%
</TABLE>

                                       20

<PAGE>


(1)    Includes securities available for sale and held to maturity and
       unamortized discounts and premiums.

(2)    Amount is net of deferred loan fees, loans in process, discounts and
       premiums, and allowance for possible loan losses and includes loans held
       for sale and non-performing loans for which the accrual of interest has
       been discontinued.

(3)    Includes short-term, long-term, and trust preferred securities.

(4)    Net interest rate spread represents the difference between the average
       yield on total assets and the average cost of total liabilities and
       equity.

(5)    Net interest margin represents tax-equivalent net interest income divided
       by average interest-earning assets.


Rate/Volume Analysis. The following table presents the extent to which net
interest income changed due to changes in interest rates and changes in the
volume of interest-earning assets and interest-bearing liabilities during the
periods indicated. Information is provided in each category with respect to
changes attributable to changes in rate (changes in rate multiplied by prior
volume), and the net change. The changes attributable to the combined impact of
volume and rate have been allocated proportionally to the changes due to volume
and the changes due to rate.

<TABLE>
<CAPTION>

                                                   Year Ended December 31, 1997        Year Ended December 31, 1996
                                                      Compared to Year Ended               Compared to Year Ended
                                                        December 31, 1996                     December 31, 1995
                                                    ----------------------------       -----------------------------

                                                        Increase (Decrease)                  Increase (Decrease)
                                                               Due to                              Due to
                                                    ----------------------------       -----------------------------

                                                    Volume     Rate         Net         Volume      Rate        Net
                                                    ------    ------      ------       -------     ------      ------
                                                                             (In Thousands)
<S>                                                 <C>        <C>        <C>          <C>         <C>         <C>
Interest-earning assets:
Interest-earning deposits                              $81       $(4)        $77          $(58)      $(27)       $(85)
Investment and mortgage-backed securities           11,737       262      11,999         7,894        290       8,184
Loans(1)                                             8,804      (225)      8,579         4,862       (535)      4,327
                                                     -----     -----       -----         -----      -----       -----

Total interest-earning assets                       20,622        33      20,655        12,698       (272)     12,426
                                                    ------        --      ------        ------      -----      ------

Interest-bearing liabilities:
Deposits                                             3,023       487       3,510         1,117       (202)        915
Borrowings                                          14,404       391      14,795         7,103        (65)      7,038
                                                    ------       ---      ------         -----       ----       -----

Total interest-bearing liabilities                  17,427       878      18,305         8,220       (267)      7,953
                                                    ------       ---      ------         -----      -----       -----

Net change in net interest income                   $3,195     $(845)     $2,350        $4,478        $(5)     $4,473
                                                    ======    ======      ======        ======       ====      ======
</TABLE>

-----------------
(1) Includes non-accrual loans.

Provision for Possible Loan Losses. The provision for possible loan losses was
$915,000 for 1997 compared to $305,000 for 1996. The increase in the provision
is a reflection of the growth of Patriot's loan portfolio and the origination of
more commercial and consumer loans. See "Credit Quality" for a detailed
discussion of Patriot's asset quality.

                                       21

<PAGE>


The following table sets forth the activity in the allowance for possible loan
losses for the years indicated:

<TABLE>
<CAPTION>

                                                       At or for the Year Ended December 31,
                                              --------------------------------------------------------
                                               1997        1996        1995        1994          1993
                                              ------      ------      ------      ------        ------
                                                                  (In thousands)
<S>                                           <C>         <C>         <C>         <C>           <C>

Allowance, beginning of year                  $1,830      $1,702      $1,720      $1,665        $1,450
Charge-offs:
          Residential                             17          13          76          --            3
          Commercial                              --          98          --          --            --
          Home equity and consumer               259          66           5           5            --
                                                 ---          --           -           -            --

                    Total charge-offs            276         177          81           5             3
                                              ------      ------      ------       ------       ------

Recoveries:
          Residential                              2          --          --          --            --
          Commercial                              31          --          --          --           217
          Home equity and consumer                10          --           3           4            --
                                                  --          --           -           -            --

                    Total recoveries              43          --           3           4           217
                                              ------      ------      ------       ------       ------

Net charge-offs (recoveries)                     233         177          78            1        (214)
Provision charged to operations                  915         305          60           56            1
                                              ------      ------      ------       ------       ------

Allowance, end of year                        $2,512      $1,830      $1,702       $1,720       $1,665
                                              ======      ======      ======       ======       ======

Net charge-offs (recoveries)
to average loans                                .07%         .08%        .05%          --%       (.12)%
Allowance for possible loan losses
as a percentage of
year-end total loans                            .59%         .65%        .88%        1.01%        1.02%
</TABLE>


Non-Interest Income. Total non-interest income was $2,330,000 for 1997 compared
to $637,000 for 1996. The increase was primarily due to an increased emphasis on
recurring non-interest income including loan and deposit fees, ATM fees and
mortgage banking gains. Non-interest income in 1997 also includes a gain of
$885,000 recognized from the deposit sale and net gains of $438,000 associated
with the sale of investment securities.

Non-Interest Expense. Total non-interest expense was $11,158,000 for 1997
compared to $9,198,000 for 1996. The increase in non-interest expense was the
result of increased salary and employee benefit costs and occupancy and
equipment costs, both related to Patriot's expanded operations. Non-interest
expense in 1996 also includes the special charge of $1,338,000 for the special
deposit insurance assessment levied against all SAIF member financial
institutions by the FDIC to recapitalize its SAIF fund. The ratio of
non-interest expense to average assets improved to 1.56% for 1997 compared to
1.93% for 1996 (excluding the special charge). The improvement in the overhead
ratio reflects the growth of Patriot while maintaining an emphasis on managing
costs.

Income Tax Provision. The income tax provision was $1,326,000 for 1997 compared
to $1,251,000 for 1996. The effective tax rate was 28.22% for 1997 compared to
38.78% for 1996. The decrease in the effective tax rate is the result of
Patriot's tax planning strategies which include investments in tax-exempt
securities. Also, prior to Patriot Bank's charter conversion, it was subject to
state income taxes. Patriot Bank's state tax expense is now considered a
non-interest expense.

                                       22
<PAGE>


FINANCIAL CONDITION

Loan Portfolio. Patriot's primary loan products are commercial, home equity
loans on existing owner-occupied residential real estate, and fixed-rate and
adjustable-rate mortgage loans. Patriot also offers residential construction
loans and other consumer loans.

Commercial Lending. Patriot originates commercial loans with an emphasis on
small businesses, professionals and entrepreneurs within Patriot's local
markets. Most of Patriot's commercial loan relationships have exposure of
$500,000 or less. Commercial loans are generally secured by real estate and
personal guarantees.

Consumer Lending. Patriot offers variable rate (based upon prime rate) home
equity lines of credit which extend credit lines based on an applicant's income
and equity in their home. These lines are generally secured by single-family,
owner-occupied residential properties. Patriot also offers fixed-rate home
equity loans which are generally secured by single-family, owner-occupied
residential properties. These loans are generally originated with terms from 1
to 15 years. Patriot also offers a variety of other consumer loans, which
primarily consist of installment loans secured by automobiles, student loans,
credit cards and other loans secured by deposit accounts.

Mortgage Lending. Patriot offers both fixed-rate and adjustable-rate mortgage
loans secured by one- to four-family residences, primarily owner-occupied,
located in Patriot's primary market area. Patriot generally underwrites its
first mortgage loans in accordance with underwriting standards set by the
Federal Home Loan Mortgage Corp. (FHLMC) and the Federal National Mortgage
Association (FNMA). Patriot also offers construction loans to qualified
borrowers for the construction of one- to four-family residences in Patriot's
market area. These loans are underwritten in accordance with the same standards
as Patriot's mortgages on existing properties, except the loans generally
provide for disbursement in stages during a construction period of up to 12
months, during which period the borrower is required to make monthly payments of
accrued interest on the outstanding loan balance.

At December 31, 1997, Patriot's total loan portfolio was $422,209,000 compared
to a total loan portfolio of $280,184,000 at December 31, 1996. The increase in
the loan portfolio was the result of aggressive marketing of commercial loans,
home equity loans and residential mortgage loans. During 1997, Patriot
originated total loans of $279,422,000 compared to total loans originated in
1996 of $130,674,000.

The following table sets forth the composition of Patriot's loan portfolio in
dollar amounts and in percentages of the respective portfolios at the dates
indicated:

<TABLE>
<CAPTION>
                                                                 At December 31,
                         -------------------------------------------------------------------------------------------------
                                1997               1996               1995               1994                 1993
                         -----------------   ----------------   ------------------    ----------------   -----------------
                                    Percent          Percent               Percent             Percent             Percent
                         Amount    of Total  Amount  of Total    Amount   of Total    Amount  of Total    Amount  of Total
                        --------   -------- -------- --------   -------   --------   -------- ---------  -------- ---------
                                                                      (In thousands)
<S>                     <C>        <C>       <C>       <C>      <C>       <C>        <C>      <C>        <C>      <C>

Residential mortgages   $302,684    71.29%  $192,518   68.13%   $131,352   66.86%   $108,203    63.41    $108,116    66.13%
Home equity               77,070    18.15     72,480   25.65      57,969   29.50      56,914    33.35      50,611    30.96
Construction               4,039     0.95      3,210    1.14       1,712     .87         374      .22          44      .03
Commercial                36,957     8.70     11,822    4.18       3,288    1.67       3,760     2.20       4,431     2.71
Other consumer loans       3,853     0.91      2,546     .90       2,159    1.10       1,391      .82         276      .17
                         -------   ------    -------  ------     -------  ------     -------   ------     -------   ------
Total loans, gross       424,603   100.00%   282,576  100.00%    196,480  100.00%    170,642   100.00%    163,478   100.00%
Deferred loan fees        (2,394)             (2,392)             (2,230)             (1,668)              (1,949)
                         -------             -------             -------             -------              -------

Total loans, net        $422,209            $280,184            $194,250            $168,974             $161,529
                        ========            ========            ========            ========             ========
</TABLE>

                                       23

<PAGE>


The following table sets forth the maturity schedule for the
Company's loan portfolio (excluding residential real estate and consumer loans):

<TABLE>
<CAPTION>

                                        Amounts at December 31, 1997, Maturing
                                      ---------------------------------------------
                                                    after one   
                                         in           year       
                                     one year or     through      after
                                         less      five years   five years     Total
                                     -----------   ----------   ----------     ------
                                                       (in thousands)
<S>                                  <C>           <C>          <C>           <C>
Loan Maturity Schedule:
Commercial loans                       $13,974       $18,941      $4,042      $36,957
Residential construction loans              37           158       2,254        2,449
Other construction loans                 1,446           144          --        1,590
                                       -------       -------      ------      -------
        Total                          $15,457       $19,243      $6,296      $40,996
                                       =======       =======      ======      =======

        Fixed rates                    $ 7,483       $18,691      $6,296      $32,470
        Adjustable rates                 7,974           552          --        8,526
                                       -------       -------      ------      -------
        Total                          $15,457       $19,243      $6,296      $40,996
                                       =======       =======      ======      =======
</TABLE>

Credit Quality. Management and the Board of Directors perform a monthly review
of all delinquent loans. The procedures taken by Patriot with respect to
delinquencies vary depending on the nature of the loan and period of
delinquency. When a borrower fails to make a required payment on a loan, Patriot
takes a number of steps to have the borrower cure the delinquency and restore
the loan to current status.

Patriot's Asset/Loan Review Committee reviews and classifies Patriot's assets
monthly and reports the results of its review to the Board of Directors. Patriot
classifies assets in accordance with applicable regulations and management
guidelines.

Patriot generally requires appraisals on an annual basis on foreclosed
properties and, to the extent necessary, properties deemed to be in-substance
foreclosures. Patriot generally conducts inspections on foreclosed properties
and properties deemed in-substance foreclosures on at least a quarterly basis.

                                       24
<PAGE>


Non-Accrual and Past-Due Loans. Patriot accrues interest on all loans until
management determines that the collection of interest is doubtful. In no event
does Patriot continue accruing interest on loans contractually past due 90 days
or more. Upon discontinuance of interest accrual, all unpaid accrued interest is
reversed. Patriot had no restructured loans within the meaning of SFAS No. 15
and no potential problem loans within the meaning of the Securities and Exchange
Commission Guide 3 at December 31, 1997.

The following table sets forth information regarding non-performing assets:

<TABLE>
<CAPTION>
                                                                             At December 31,
                                                              --------------------------------------------

                                                               1997     1996     1995       1994      1993
                                                               ----     ----     ----       ----      ----
                                                                             (In thousands)
<S>                                                            <C>      <C>      <C>       <C>       <C>
Non-accrual loans:
Residential mortgages                                          $524     $411     $494       $498      $715
Commercial                                                      128        6       10         16        65
Home equity and consumer                                        125      151       77        215        92
                                                             ------     ----     ----       ----    ------

Total non-accrual loans greater than 90 days                    777      568      581        729       872
                                                             ------     ----     ----       ----    ------
Residential mortgages                                           328       --       --         --        --
Home equity and consumer                                          7       --       --         --        --
                                                                  -       --       --         --        --

Total non-accrual loans less than 90 days                       335       --       --         --        --
                                                                ---       --       --         --        --

Total non-performing loans                                    1,112      568      581        729       872

REO                                                             162       74      195        265       548
                                                             ------     ----     ----       ----    ------
Total non-performing assets                                  $1,274     $642     $776       $994    $1,420
                                                             ======     ====     ====       ====    ======

Allowance for possible loan losses as a percent
of loans receivable                                             .59%     .65%     .88%      1.01%     1.02%
Allowance for possible loan losses as a percent
of total non-performing loans                                225.90   321.94   292.94     235.94    190.94
Non-performing loans as a percent of total
loans receivable                                                .26      .20      .30        .43       .53
Non-performing assets as a percent of total assets              .15      .12      .29        .45       .64

</TABLE>



                                       25

<PAGE>


Allowance for Possible Loan Losses. The adequacy of the allowance for possible
loan losses is based on management's evaluation of the risks inherent in its
loan portfolio and the general economy. Management makes a quarterly
determination as to an appropriate provision from earnings necessary to maintain
an allowance for loan losses that is adequate to cover estimated losses with
respect to loans receivable which are deemed probable and estimable based on
information currently known to management. The amount charged to earnings is
based upon several factors, including a continuing review of delinquent,
classified and non-accrual loans, large loans, and overall portfolio quality,
regular examination and review of the loan portfolio by regulatory authorities,
analytical review of loan charge-off experience, delinquency rates, other
relevant historical and peer statistical ratios, and management's judgment with
respect to local and general economic conditions and their impact on the
existing loan portfolio. Although management believes the allowance is adequate
to protect against future losses arising out of its existing loan portfolio,
actual losses are dependent on future events and, as such, further additions to
the allowance may be necessary. Patriot will continue to monitor and modify its
allowance for loan losses as conditions dictate.

The following table sets forth management's allocation of the allowance for
possible loan losses at the dates indicated:

<TABLE>
<CAPTION>

                                                              At December 31,
                     ---------------------------------------------------------------------------------------------------
                                  1997                             1996                             1995
                     ----------------------------------  -------------------------------  ------------------------------
                                             Percent of                       Percent of                     Percent of
                               Percent of    Loans in            Percent of    Loans in          Percent of    Loans in
                               Allowance       Each               Allowance      Each             Allowance      Each
                                  to         Category                 to       Category               to       Category
                                 Total       to Total               Total      to Total              Total     to Total
                      Amount   Allowance      Loans      Amount   Allowance     Loans     Amount   Allowance     Loans
                    --------  ----------    ----------  -------  ----------   ----------  ------  ----------  ----------
                                                                    (In thousands)
<S>                 <C>       <C>           <C>         <C>      <C>          <C>         <C>     <C>         <C>
Residential
mortgages            $1,253     49.88%       72.24%       $895      48.87%      69.27%     $1,265    74.32%       67.73%
Commercial              629     25.04         8.70         261      14.28        4.18          33     1.94         1.67
Home equity
and consumer            630     25.08        19.06         674      36.85       26.55         404    23.74        30.60
                     ------    ------      -------      ------     ------      ------      ------   ------       ------
Total valuation
allowances           $2,512    100.00%      100.00%     $1,830     100.00%     100.00%     $1,702   100.00%      100.00%
                     ======    ======      =======      ======     ======      ======      ======   ======       ======
</TABLE>


<TABLE>
<CAPTION>
                                  1994                            1993
                     --------------------------------  ---------------------------------
                                           Percent of                         Percent of
                              Percent of    Loans in            Percent of     Loans in
                              Allowance       Each               Allowance      Each
                                 to         Category                to        Category
                               Total       to Total               Total       to Total
                     Amount  Allowance      Loans       Amount   Allowance      Loans
                     ------- ---------     ----------  -------  ----------  ------------
<S>                  <C>     <C>           <C>         <C>      <C>         <C>
Residential
mortgages            $1,212     70.47%       63.63%     $1,193     71.65%        66.16%
Commercial               52      3.02         2.20          59      3.54          2.71
Home equity
and consumer            456     26.51        34.17         413     24.81         31.13
                     ------   -------      -------     -------     -----        ------

Total valuation
allowances           $1,720    100.00%      100.00%     $1,665    100.00%       100.00%
                     ======   =======      =======      ======    ======        ======
</TABLE>

Cash and Cash Equivalents. Cash and cash equivalents at December 31, 1997 were
$9,014,000 compared to $6,853,000 at December 31, 1996. The increase in cash and
cash equivalents was primarily due to cash needed to support two additional
community banking offices opened in 1997 and the increased activity associated
with servicing commercial customers.


                                       26
<PAGE>


Investment and Mortgage-Backed Securities. Investment securities consist of US
Treasury and government agency securities, corporate debt and equity securities.
Mortgage-backed securities consist of securities generally insured by either the
FHLMC, FNMA or the Government National Mortgage Association (GNMA).
Collateralized mortgage obligations consist of securities issued by the FHLMC,
FNMA or private issuers.

Total investment and mortgage-backed securities at December 31, 1997 were
$405,641,000 compared to $231,858,000 at December 31, 1996. The increase in
investment and mortgage-backed securities was due to the purchase of investment
and mortgage-backed securities pursuant to Patriot's growth strategy. The
majority of securities purchased in 1997 were adjustable rate collateralized
mortgage obligations with interest rates tied to one month LIBOR.

The following table sets forth certain information regarding the amortized cost
and market value of investment and mortgage-backed securities at the dates
indicated:

<TABLE>
<CAPTION>

                                                                            At December 31,
                                                ---------------------------------------------------------------------
                                                         1997                    1996                   1995
                                                ---------------------     ------------------     --------------------
                                                 Amortized     Market     Amortized   Market     Amortized    Market
                                                   Cost        Value        Cost      Value        Cost        Value
                                                -----------   --------    ----------  ------     ---------    ------
                                                                            (In thousands)
<S>                                             <C>           <C>         <C>          <C>        <C>          <C>
Available for sale:
Investment securities:
US Treasury and government
agency securities                                 $19,884     $20,086      $5,023      $4,990      $7,105      $7,175
Corporate securities                               17,493      18,767          --          --       1,019       1,046
Equity securities                                  48,168      52,553      23,797      24,492       1,914       1,914
Mortgage-backed securities:
FHLMC                                              11,287      11,501      14,582      14,709      12,179      12,258
FNMA                                               20,163      20,254      25,118      25,124      17,709      17,755
GNMA                                               12,592      12,871      14,498      14,751       5,463       5,539
Collateralized mortgage obligations:
FHLMC                                              75,085      75,784      37,928      37,639       1,964       1,959
FNMA                                              118,778     118,844      31,654      31,502          --          --
Other                                              12,522      12,465       5,976       5,941          --          --
                                                   ------      ------      -----       -----      -------     -------

Total investment and mortgage-backed
securities available for sale                    $335,972    $343,125    $158,576    $159,148     $47,353     $47,646
                                                 ========    ========    ========    ========     =======     =======

Held to maturity:
Investment securities:
US Treasury and government
   agency securities                               $1,035      $1,034      $1,911      $1,892      $2,414      $2,397
Corporate securities                                1,502       1,544       2,506       2,533       1,503       1,566
Collateralized mortgage obligations:
FHLMC                                               1,801       1,804          --          --          --          --
FNMA                                                9,775       9,887          --          --          --          --
Other                                              48,403      48,548      68,293      68,297          --          --
                                                    ------     ------      ------      ------          --          --

Total investment and mortgage-backed
    securities held to maturity                   $62,516     $62,817     $72,710     $72,722      $3,917      $3,963
                                                  =======     =======     =======     =======      ======      ======
</TABLE>

                                       27
<PAGE>


The following table sets forth certain information regarding the carrying value,
weighted average yield and contractual maturities of the Company's investment
and mortgage-backed securities as of December 31, 1997.

<TABLE>
<CAPTION>

                                                   More than           More than
                                                   one year           five years                               No stated
                            One year or less     to five years       to ten years      More than 10 years      maturity      
                            -----------------  -----------------  -------------------  ------------------  ----------------      
                                     Weighted            Weighted             Weighted           Weighted          Weighted
                            Carrying  Average  Carrying  Average  Carrying    Average  Carrying  Average  Carrying  Average 
                             Value    Yield      Value    Yield     Value      Yield     Value    Yield     Value    Yield  
                            -------  -------   -------   -------  -------     -------- -------   -------- --------  ------- 
                                                                  (in thousands)
 
<S>                         <C>      <C>       <C>       <C>       <C>        <C>      <C>       <C>     <C>        <C>
Available for sale:

Investment securities:

 U.S. Treasury and
  government securities       $--      --%     $2,753    2.83%    $1,858       2.83%   $15,475   2.83%       $--       --%  
 Corporate securities          --     --          --       --         --         --     18,767   9.36         --       --   
 Equity securities             --     --          --       --         --         --         --    --      52,553     6.20   

Mortgage-backed securities:

 FHLMC                      1,460    7.42       4,240    7.42        876       7.42      4,925   7.42         --       --   
 FNMA                       2,516    7.41       5,769    7.41      4,172       7.41      7,797   7.41         --       --   
 GNMA                         207    6.72         905    6.72      1,452       6.72     10,307   6.72         --       --   

Collateralized mortgage obligations:

 FHLMC                      8,581    7.08      17,057    7.08     13,123       7.08     37,023   7.08         --       --   
 FNMA                       1,596    7.20      56,219    7.20     56,474       7.20      4,555   7.20         --       --   
 Other                      1,679    6.40       7,896    6.40      2,890       6.40         --    --          --       --   
                          -------    ----     -------    ----    -------       ----    -------   ----    -------      ----  
Total available for    
  sale                    $16,039    7.10%    $94,839    7.01%   $80,845       7.06%   $98,849   6.86%   $52,553     6.20% 
                          =======    ====     =======    ====    =======       ====    =======   ====    =======     ====  

Held to maturity:

Investment securities:

 U.S Treasury and
  government securities       $135   5.57%       $650    5.57%      $250       5.57%       $--     --%       $--       --% 
  
 Corporate securities          --      --       1,502    6.96         --         --         --     --         --       --  
 Equity securities             --      --          --       --        --         --         --     --         --       --  

Collateralized mortgage obligations:

 FHLMC                        392    6.00       1,409    6.00         --         --         --     --         --       --  
 FNMA                       1,013    7.00       4,838    7.00      3,924       7.00         --     --         --       --  
 Other                     11,188    7.07      32,009    7.07      5,206       7.07         --     --         --       --  
                          -------    ----     -------    ----    -------       ----    -------   ----    -------     ----  
Total available    
 for sale                 $12,728    7.02%    $40,408    7.00%    $9,380       7.00%      $--      --%      $--        --% 
                          =======    ====     =======    ====    =======       ====    =======   ====    =======     ====  
 
</TABLE>


                             
<TABLE>
<CAPTION>                             
                                   Total
                            -------------------     
                                       Weighted
                             Carrying  Average
                              Value     Yield
                             -------   -------
<S>                         <C>        <C>
                             
Available for sale:

Investment securities:

 U.S. Treasury and
  government securities        $20,086   2.83%
 Corporate securities           18,767   9.36
 Equity securities              52,553   6.20

Mortgage-backed securities:

 FHLMC                          11,501   7.42
 FNMA                           20,254   7.41
 GNMA                           12,871   6.72

Collateralized mortgage obligations:

 FHLMC                          75,784   7.08
 FNMA                          118,844   7.20
 Other                          12,465   6.40
                              --------   ----
Total available for    
  sale                        $343,125   6.86%
                              ========   ====

Held to maturity:

Investment securities:

 U.S Treasury and
  government securities         $1,035   5.57%
  
 Corporate securities            1,502   6.96
 Equity securities                  --    --

Collateralized mortgage obligations:

 FHLMC                           1,801   6.00
 FNMA                            9,775   7.00
 Other                          48,403   7.07
                              --------   ----
Total available    
 for sale                      $62,516   7.00%
                              ========   ====
 
</TABLE>


                                       28
<PAGE>


Patriot accounts for its investment securities in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," which
requires management to classify investments in equity securities that have
readily determinable fair values and all investments in debt securities as
either held to maturity and reported at amortized cost, available for sale and
reported at fair value with unrealized gains and losses reported in a separate
component of stockholders' equity, or trading securities and reported at fair
value with unrealized gains and losses included in earnings.

In November 1995, the Financial Accounting Standards Board issued a special
report entitled "A Guide to Implementation of Statement No. 115 on Accounting
for Certain Investments in Debt and Equity Securities." This guide allows
enterprises to reassess the appropriateness of the classification of all
securities held. Based on this special report, Patriot reclassified $6,000,000
of securities from held to maturity to available for sale. The transfer was made
at fair value and resulted in an estimated unrealized loss of $59,000 and a
decrease in stockholders' equity of $39,000 based on current market values.

The following table represents the securities of single issuers (other than
obligations of the United States and its political subdivisions, agencies and
corporations) having an aggregate book value in excess of 10% of Patriot's
stockholder's equity which were held at 12-31-97:

                                                    At December 31, 1997
                                             --------------------------------
                                                       (in thousands)
Issuer                                       Carrying Value         Fair Value
------                                       --------------         ----------
FHLMC Preferred Stock                           $31,299               $31,299
FHLB Stock                                      $13,760               $13,760
Capstead Securities Corp. IV                     $6,055                $6,079
CMC Securities Corporation II                     6,377                 6,441
GE Capital MTG. Services, Inc.                    7,500                 7,500
Commerce Capital Trust                            5,276                 5,276
Securitized Asset Sales, Inc.                     4,853                 4,853

Other Assets. Premises and equipment at December 31, 1997 were $8,542,000
compared to $7,724,000 at December 31, 1996. The increase was due to the opening
of two new banking offices, and investments in technology. Accrued interest
receivable at December 31, 1997 was $4,119,000 compared to $2,649,000 at
December 31, 1996. The increase is consistent with the growth in the loan and
investment portfolios. Real estate owned at December 31, 1997 was $162,000
compared to $74,000 at December 31, 1996.

Deposits. Deposits are generally attracted from within Patriot's primary market
area through the offering of various deposit instruments, including NOW
accounts, money market accounts, savings accounts, certificates of deposit and
retirement savings plans. Patriot also solicits jumbo deposits from various
sources.

Total deposits at December 31, 1997 were $289,528,000 compared to $239,514,000
at December 31, 1996. The increase in balance was the result of aggressive
marketing of money market and other transaction-based deposit accounts, the
opening of two new community banking offices and an increase in Patriot's jumbo
deposit program.

                                       29
<PAGE>


The following table sets forth the distribution of average deposit accounts for
the periods indicated and the weighted average yield on each category of deposit
presented:

<TABLE>
<CAPTION>
                                                            For the Year Ended December 31,
                              -----------------------------------------------------------------------------------------

                                           1997                          1996                         1995
                              ----------------------------- --------------------------- -------------------------------
                                         Percent                      Percent                       Percent
                                         of Total  Weighted          of Total  Weighted             of Total   Weighted
                              Average    Average   Average  Average   Average   Average  Average    Average     Average
                              Balance    Deposits  Yield    Balance   Deposits  Yield    Balance    Deposits     Yield
                              -------    --------  -------  -------  --------- --------  -------    --------    --------
                                                                         (In thousands)
<S>                           <C>        <C>       <C>      <C>       <C>      <C>        <C>       <C>         <C>
Money market deposits         $42,425     15.38%    4.29%   $33,829     15.49%   4.02%    $27,512     14.00%     3.95%
Passbook deposits              27,149      9.84     2.61     27,444     12.57    2.38      32,059     16.32      2.19
NOW deposits                   18,399      6.67     0.55     17,502      8.02    0.58      16,685      8.49      1.65
Demand deposits                 5,929      2.15       --      3,579      1.64      --       1,748      0.89        --
Certificates of deposit       181,909     65.96     5.92    136,010     62.28    5.72     118,494     60.30      5.82
                              -------   -------    -----    -------    ------   -----     -------   -------      ----
Total                        $275,811    100.00%    4.86%  $218,364    100.00%   4.53%   $196,498   100.00%      4.57%
                             ========    =======   =====   ========   =======   =====    ========   =======     =====
</TABLE>


At December 31, 1997, the Company had $41,788,000 in certificate of deposit
accounts in amounts of $100,000 or more maturing as follows:

             Maturity Period                                Amount
             ---------------                                ------
      Three months or less...........................       $   942
      Over three through six months..................         1,806
      Over six through 12 months.....................         4,712
      Over 12 months.................................        34,328
                                                            -------
           Total.....................................        41,788
                                                            =======


Borrowings. Patriot utilizes borrowings as a source of funds for its growth
strategy and its asset/liability management. Patriot is eligible to obtain
advances from the Federal Home Loan Bank (FHLB) upon the security of the FHLB
common stock it owns and certain of its residential mortgages and
mortgage-backed securities, provided certain standards related to
creditworthiness have been met. FHLB advances are made pursuant to several
different credit programs, each of which has its own interest rate and range of
maturities. The maximum amount that the FHLB will advance to member institutions
fluctuates from time to time in accordance with the policies of the FHLB.
Patriot also uses repurchase agreements as a funding source. Repurchase
agreements are generally short-term obligations collateralized by government
agency securities.

                                       30
<PAGE>



The following table presents certain information regarding borrowed funds:

<TABLE>
<CAPTION>
                                                                      At December 31,
                                        -------------------------------------------------------------------------
                                                 1997                      1996                        1995
                                        -----------------------     -------------------       -------------------
                                                        Average                 Average                   Average
                                         Balance         Rate        Balance      Rate        Balance       Rate
                                        --------       --------     --------     ------       -------      -------
                                                                      (In thousands)

<S>                                     <C>            <C>          <C>           <C>         <C>          <C>
FHLB advances                           $275,200         5.78%      $210,000      5.64%       $10,000       5.82%
Repurchase agreements                    214,684         5.89         21,595      6.22             --         --
Trust Preferred                           18,417        10.80           --          --             --         --
                                         -------         -----       -------      -----       -------      -----
Total borrowings outstanding            $508,301         6.01%      $231,595      5.69%       $10,000       5.82%
                                        ========         ====       ========      ====        =======       ====

Short-term                              $385,684         5.84%      $145,595      5.73%       $10,000       5.82%
Long-term                               $122,617         6.55         86,000      5.65             --         --
                                        --------         ----       --------      ----        -------       ----
Total borrowings outstanding            $508,301         6.01%      $231,595      5.69%       $10,000       5.82%
                                        ========         ====       ========      ====        =======       ====
</TABLE>

Stockholders' Equity. Total stockholders' equity was $46,533,000 at December 31,
1997 compared to $53,117,000 at December 31, 1996. The decrease was a result of
the repurchase of common stock and cash dividends paid offset somewhat by the
retention of earnings and an increase in the net unrealized gain on investment
and mortgage-backed securities available for sale.

                                       31
<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

Liquidity. Patriot's primary sources of funds are deposits, principal and
interest payments on loans, principal and interest payments on investment and
mortgage-backed securities, FHLB advances and repurchase agreements. While
maturities and scheduled amortization of loans and investment and
mortgage-backed securities are predictable sources of funds, deposit inflows and
loan and mortgage-backed security prepayments are greatly influenced by economic
conditions, general interest rates and competition. Therefore, Patriot manages
its balance sheet to provide adequate liquidity based upon various economic,
interest rate and competitive assumptions and in light of profitability
measures.

During 1997, significant liquidity was provided by financing activities,
particularly FHLB advances, repurchase agreements and the trust preferred
securities, as well as by deposit growth. Maturities of investment and
mortgage-backed securities also provided significant liquidity during 1997. The
funds provided by these activities were invested in new loans and investment and
mortgage-backed securities, and funded the sale of deposits and the repurchase
of Patriot's common stock.

At December 31, 1997, Patriot had outstanding loan commitments of $49,663,000.
Patriot anticipates that it will have sufficient funds available to meet its
loan origination commitments. Certificates of deposit which are scheduled to
mature in one year or less from December 31, 1997 totaled $91,399,000. Based
upon historical experience, Patriot expects that substantially all of the
maturing certificates of deposit will be retained at maturity.

Capital Resources. FDIC regulations currently require companies to maintain a
minimum leverage capital ratio of not less than 3% of tier 1 capital to total
adjusted assets and not less than 4% of risk-adjusted assets, and a minimum
risk-based capital ratio (based upon credit risk) of not less than 8%. The FDIC
requires a minimum leverage capital requirement of 3% for institutions rated
composite 1 under the CAMEL rating system. For all other institutions, the
minimum leverage capital requirement is 3% plus at least an additional 100 to
200 basis points.

   At December 31, 1997, Patriot Bank's and Bank Corp.'s capital ratios exceeded
all well capitalized required ratios. The following table sets forth the capital
ratios of Patriot Bank Corp., Patriot Bank and the current regulatory
requirements at December 31, 1997:

<TABLE>
<CAPTION>
                                                                                             To Be Well
                                                                    For Capital           Capitalized Under
                                                 Actual            Adequacy Purposes    Prompt Corrective Action
                                            -----------------      ----------------     -----------------------
                                            Amount     Ratio         Amount   Ratio      Amount           Ratio
                                            ------     ------      ---------  -----     --------          -----
<S>                                         <C>       <C>          <C>        <C>       <C>               <C>
As of  December 31, 1997
   Total capital (to risk weighted assets)

    Patriot Bank Corp.                     $62,807     14.54%       $34,567     8%       $43,208            10%
    Patriot                                 44,100     10.77%        32,748     8%        40,936            10%

    Tier I capital (to risk-weighted assets)

    Patriot Bank Corp.                      55,837     12.92%        17,283     4%        25,925             6%
    Patriot                                 41,588     10.16%        16,374     4%        24,561             6%

     Tier I capital (to average assets)

    Patriot Bank Corp.                      55,837      7.90%        28,282     4%        35,353             5%
    Patriot                                 41,588      6.12%        27,204     4%        34,005             5%

</TABLE>

                                       32
<PAGE>


Management of Interest Rate Risk

   The principal objective of Patriot's interest rate risk management function
is to evaluate the interest rate risk included in certain on and off balance
sheet accounts, determine the level of risk appropriate given Patriot's business
focus, operating environment, capital and liquidity requirements and performance
objectives, and manage the risk consistent with Board approved guidelines.
Through such management, Patriot seeks to reduce the vulnerability of its net
interest income to changes in interest rates. Patriot monitors its interest rate
risk as such risk relates to its operating strategies. Patriot's Board of
Directors has established an Asset/Liability Committee comprised of senior
management, which is responsible for reviewing its asset/liability and interest
rate position and making decisions involving asset/liability considerations. The
Asset/Liability Committee meets regularly and reports trends and Patriot's
interest rate risk position to the Board of Directors.

The matching of assets and liabilities may be analyzed by examining the extent
to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest rate sensitivity
gap is defined as the difference between the amount of interest-earning assets
maturing or repricing within a specific time period and the amount of
interest-bearing liabilities maturing or repricing within that time period. A
gap is considered positive when the amount of interest rate sensitive assets
exceeds the amount of interest rate sensitive liabilities. A gap is considered
negative when the amount of interest rate sensitive liabilities exceeds the
amount of interest rate sensitive assets. During a period of rising interest
rates, therefore, a negative gap theoretically would tend to adversely affect
net interest income, while a positive gap would tend to result in an increase in
net interest income. Conversely, during a period of falling interest rates, a
negative gap position would theoretically tend to result in an increase in net
interest income while a positive gap would tend to affect net interest income
adversely.

   Patriot pursues several actions designed to control its level of interest
rate risk. These actions include increasing the percentage of the loan portfolio
consisting of short-term and adjustable-rate loans through increased
originations of these loans, acquiring short-term and adjustable-rate
mortgage-backed securities, and undertaking to lengthen the maturities of
deposits and borrowings. At December 31, 1997, Patriot's total interest-bearing
liabilities maturing or repricing within one year exceeded its total net
interest-earning assets maturing or repricing in the same time period by
$111,213,000 representing a one-year cumulative "gap," as defined above, as a
percentage of total assets of negative 13.06%.

                                       33
<PAGE>



   The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 1997, which are
anticipated, based upon certain assumptions, to reprice or mature in each of the
future time periods shown. Except as stated below, the amount of assets and
liabilities shown which reprice or mature during a particular period were
determined in accordance with the earlier of term to repricing or the
contractual maturity of the asset or liability. The table sets forth an
approximation of the projected repricing of assets and liabilities at December
31, 1997, on the basis of contractual maturities, anticipated prepayments, and
scheduled rate adjustments within a three-month period and subsequent selected
time intervals. The loan amounts in the table reflect principal balances
expected to be repaid and/or repriced as a result of contractual amortization
and anticipated prepayments of adjustable-rate loans and fixed-rate loans, and
as a result of contractual rate adjustments on adjustable-rate loans.

<TABLE>
<CAPTION>
                                                                At December 31, 1997
                                       -------------------------------------------------------------------------
                                       3 Months    3 Months to 6 Months to  1 Year to 3 Years to More than
                                        or Less     6 Months     1 Year      3 Years   5 Years   5 Years   Total
                                       --------     ----------   ------      -------   -------   -------   -----
                                                                    (In thousands)
<S>                                    <C>          <C>          <C>        <C>        <C>        <C>     <C>
Interest earning assets(1):
Interest earning deposits                $6,417       $--         $--         $--        $--       $--     $6,417
Investment and mortgage-backed          
  securities, net(2)(5)                 203,471      12,472      17,242      35,116     33,820   103,520  405,641
Loans receivable, net(3)(5)              54,791      29,865      71,878      97,005     57,143   113,110  423,792
                                      ---------      ------     -------     -------    -------  --------  -------

Total interest-earning assets           264,679      42,337      89,120     132,121     90,963   216,630  835,850

Non-interest-earning assets               --          --          --          --         --       15,650   15,650
                                      ---------      ------     -------     -------    -------  --------  -------

Total assets                            264,679      42,337      89,120     132,121     90,963   232,280  851,500
                                      ---------      ------     -------     -------   -------   --------  -------

Interest-bearing liabilities:

Money market and passbook savings         
  accounts(6)                             8,407       8,407      16,813      14,810      4,928    22,841   76,206
Demand and NOW accounts(6)                  292         292         584       2,335      2,335    22,187   28,025
Certificates of deposit                  17,538      25,317      44,015      87,006      3,540     7,881  185,297
Borrowings                              375,684       --         10,000      19,000     85,000    18,617  508,301
                                      ---------      ------     -------     -------    -------   -------  -------
Total interest-bearing liabilities      401,921      34,016      71,412     123,151     95,803    71,526  797,829

Non-interest-bearing liabilities                                                                   7,138    7,138
Equity                                    --          --          --          --         --       46,533   46,533
                                      ---------      ------     -------     -------    -------  --------  -------
Total liabilities and equity            401,921      34,016      71,412     123,151     95,803   125,197  851,500
                                      ---------      ------     -------     -------    -------  --------  -------

Interest sensitivity gap(4)           $(137,242)     $8,321     $17,708      $8,970    $(4,840) $107,083  $    --
                                      =========      ======     =======     =======    =======  ========  =======

Cumulative interest sensitivity gap   $(137,242)  $(128,921)  $(111,213)  $(102,243) $(107,083) $     --
                                      =========   =========   =========   =========  =========  ========

Cumulative interest sensitivity        
  gap as a percent of total assets       (16.12)%    (15.14)%    (13.06)%    (12.01)%   (12.58)%      --%

Cumulative interest-earning assets       
  as a percent of cumulative
  interest-bearing liabilities           65.85%       70.43%      78.08%      83.78%     85.26%   104.77% 
</TABLE>

                                       34
<PAGE>


(1)    Interest-earning assets are included in the period in which the balances
       are expected to be repaid and/or repriced as a result of anticipated
       prepayments, scheduled rate adjustments, and contractual maturities.
(2)    Includes investment and mortgage-backed securities available for sale and
       held to maturity.
(3)    For purposes of the gap analysis, loans receivable includes non-
       performing loans and is reduced for the allowance for possible loan
       losses, and unamortized discounts and deferred loan fees.
(4)    Interest sensitivity gap represents the difference between total
       interest-earning assets and total interest-bearing liabilities.
(5)    Annual prepayment rates for loans and mortgage-backed securities range 
       from 12% to 30%.
(6)    Money market and savings accounts, and NOW accounts are assumed to have
       decay rates between 4% and 76% annually and have been estimated based
       upon a historic analysis of core deposit trends.

   In addition to gap analysis, Patriot utilizes income simulation modeling in
measuring its interest rate risk and managing its interest rate sensitivity.
Income simulation considers not only the impact of changing market interest
rates on forecasted net interest income, but also other factors such as yield
curve relationships, the volume and mix of assets and liabilities, customer
preferences and general market conditions.

   Through the use of income simulation modeling Patriot has calculated an
estimate of net interest income for the year ending December 31, 1998 based upon
the assets, liabilities and off-balance sheet financial instruments in existence
at December 31, 1997. Patriot has also estimated changes to that estimated net
interest income based upon immediate and sustained changes in interest rates
("rate shocks"). Rate shocks assume that all interest rates increase or decrease
on the first day of the period modeled and remain at that level for the entire
period. The following table reflects the estimated percentage change in
estimated net interest income for the year ending December 31, 1998.




          Rate shock to interest rates                 % change
          ----------------------------                 --------
                     +2%                                (12.1%)
                     +1%                                 (5.5%)
                     -1%                                  5.3%
                     -2%                                 11.5%

   Patriot's management believes that the assumptions utilized in evaluating
Patriot's estimated net interest income are reasonable; however, the interest
rate sensitivity of Patriot's assets, liabilities and off-balance sheet
financial instruments as well as the estimated effect of changes in interest
rates on estimated net interest income could vary substantially if different
assumptions are used or actual experience differs from the experience on which
the assumptions were based.

                                       35
<PAGE>



QUARTERLY DATA

The following table presents selected quarterly consolidated financial data:

<TABLE>
<CAPTION>

                                                                          Three Months Ended
                                        ----------------------------------------------------------------------------------

                                        Dec. 31,   Sept. 30,  June 30,   March 31,  Dec. 31,  Sept. 30, June 30,  March 31,
                                         1997        1997      1997        1997       1996      1996      1996      1996
                                        --------   --------  --------    --------   --------  --------  -------   --------
                                                               (In thousands, except per share data)
<S>                                     <C>        <C>       <C>         <C>        <C>        <C>      <C>       <C>
Total interest income                   $14,860    $13,746   $11,323     $10,320    $9,102     $8,424    $6,862    $5,206
Total interest expense                   11,138     10,143     7,730       6,796     5,855      5,194     3,867     2,586
                                         ------     ------     -----       -----     -----      -----     -----     -----

Net interest income                       3,722      3,603     3,593       3,524     3,247      3,230     2,995     2,620
Provision for possible loan losses          455        235       120         105       100         90        80        35
                                            ---        ---       ---         ---       ---         --        --        --

Net interest income after
provision for possible loan losses        3,267      3,368     3,473       3,419     3,147      3,140     2,915     2,585
Other income                              1,274        575       256         225       257        128       131       121
Other expenses                            3,405      2,859     2,521       2,373     2,145      3,381     1,928     1,744
                                          -----      -----     -----       -----     -----      -----     -----     -----

Income before income taxes                1,136      1,084     1,208       1,271     1,259       (113)    1,118       962
Income tax provision                        242        253       370         461       452        (20)      440       379
                                            ---        ---       ---         ---       ---       ----       ---       ---

Net income                                 $894       $831      $838        $810      $807       $(93)     $678      $583
                                           ====       ====      ====        ====      ====      =====      ====      ====

Earnings per share diluted                 .216       .183      .175        .167      .158      (.021)     .132      .118
Dividends per share                        .079       .077      .073        .069      .067       .056      .042      .013
   

</TABLE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

General. Patriot reported net income of $1,975,000 or $.39 per share for the
year ended December 31, 1996. This represents an increase of 66% over net income
of $1,192,000 in 1995. Return on average equity was 3.71%, for 1996 compared to
5.40%, for 1995.

Net Interest Income. Net interest income for 1996 was $12,092,000 compared to
$7,619,000 in 1995. This represents an increase of 58% and is primarily due to
an increase in average balances. Patriot's average interest rate spread (the
difference between the weighted average yield on interest-earning assets and the
weighted average cost of interest-bearing liabilities) was 2.44% in 1996
compared to 3.01% in 1995.

Interest on loans was $18,429,000 for 1996 compared to $14,102,000 for 1995. The
average balance of loans was $234,726,000 with an average yield of 7.85%
compared to an average balance of $173,020,000 with an average yield of 8.15%
for 1995. The increase in average balance is due to the origination of
residential mortgage loans and home equity loans and to a lesser extent,
commercial loans. The decrease in average yield is primarily a result of an
emphasis on short-term and adjustable-rate loans.


                                       36
<PAGE>


Interest on investment and mortgage-backed securities was $11,049,000 for 1996
compared to $2,865,000 in 1995. The average balance of the investment portfolio
was $165,159,000 with an average yield of 6.69% for 1996 compared to an average
balance of $46,802,000 with an average yield of 6.12% for 1995. The increase in
average balance and the increase in average yield was due to the purchase of
investment and mortgage-backed securities.

Interest on total deposits was $9,895,000 for 1996 compared to $8,980,000 for
1995. The average balance of total deposits was $218,364,000 with an average
cost of 4.53% for 1996 compared to an average balance of $196,498,000 with an
average cost of 4.57% for 1995. The increase in average balance was the result
of aggressive marketing of time and transaction-based deposit accounts. The
opening of three new community banking offices and the introduction of a jumbo
deposit program late in 1996. The decrease in average yield was the result of an
emphasis placed on transaction-based deposit accounts and lower rates offered on
time deposits.

Interest on borrowings was $7,607,000 in 1996 compared to $569,000 in 1995. The
average balance of borrowings was $136,200,000 with an average cost of 5.57% for
1996 compared to an average balance of $9,126,000 with an average cost of 6.23%
for 1995. The increase in average balance was due to the use of borrowings to
fund the growth in the balance sheet. The decrease in average cost was due to
higher balances of short-term borrowings.

Provision for Possible Loan Losses. The provision for possible loan losses was
$305,000 for 1996 compared to $60,000 for 1995. The increase in the provision is
a reflection of the growth of Patriot's loan portfolio and the origination of
commercial and consumer loans.

Non-interest Income. Total non-interest income was $637,000 for 1995 compared to
$518,000 for 1995. The increase was primarily due to mortgage banking gains
recognized in 1996 and less of a net loss on the sale of investment and
mortgage-backed securities in 1996 than in 1995, offset somewhat by less of a
net gain on the disposition of real estate acquired through foreclosure.

Non-interest Expense. Total non-interest expense was $9,198,000 for 1996
compared to $6,151,000 for 1995. The increase in non-interest expense was the
result of increased salary and employee benefit costs and occupancy and
equipment costs, both related to Patriot's expanded operations. Non-interest
expense in 1996 also includes the special charge of $1,338,000 for the special
deposit insurance assessment levied against all SAIF member financial
institutions by the FDIC to recapitalize its SAIF fund.

Income Tax Provision. The income tax provision was $1,251,000 for 1996 compared
to $734,000 for 1995. The effective tax rate was 38.78% for 1996 compared to
38.11% for 1995.

                                       37
<PAGE>


Report of Independent Certified Public Accountants

Board of Directors
Patriot Bank Corp.

We have audited the accompanying consolidated Balance Sheets of Patriot Bank
Corp. and Subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1997. These consolidated
financial statements are the responsibility of Patriot Bank Corp.'s management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Patriot Bank Corp.
and Subsidiaries as of December 31, 1997 and 1996, and the consolidated results
of their operations and their consolidated cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.


Grant Thornton  LLP
Philadelphia, Pennsylvania
January 21, 1998



                                       38
<PAGE>


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

     The discussion concerning the effects of interest rate changes on the
Company's estimated net interest income for the year ending December 31, 1998
set forth in the last three paragraphs under "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Management of
Interest Rate Risk" in Item 7 hereof, is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data


Patriot Bank Corp. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

<TABLE>
<CAPTION>

                                                                                     December 31,
                                                                                ----------------------
                                                                                  1997           1996
                                                                                -------         ------
<S>                                                                             <C>             <C>
Assets
Cash and due from banks                                                          $2,597         $1,997
Interest-earning deposits in other financial institutions                         6,417          4,856
                                                                               --------       --------

Total cash and cash equivalents                                                   9,014          6,853

Investment and mortgage-backed securities available for sale                    343,125        159,148
Investment and mortgage-backed securities held to maturity
  (market value of $62,817 and $72,722 at December 31,
  1997 and 1996, respectively)                                                   62,516         72,710
Loans held for sale                                                               4,095            --
Loans receivable                                                                422,209        280,184
Allowance for possible loan losses                                               (2,512)        (1,830)
Premises and equipment, net                                                       8,542          7,724
Accrued interest receivable                                                       4,119          2,649
Real estate owned                                                                   162             74
Other assets                                                                        230          1,653
                                                                               --------       --------

Total assets                                                                   $851,500       $529,165
                                                                               ========       ========

Liabilities and stockholders' equity
Deposits                                                                       $289,528       $239,514
FHLB Advances                                                                   275,200        210,000
Securities sold under repurchase agreements                                     214,684         21,595
Advances from borrowers for taxes and insurance                                   3,135          2,499
Guaranteed Preferred Beneficial Interest in the
  Company's subordinated debt                                                    18,417             --
Other liabilities                                                                 4,003          2,440
                                                                               --------       --------

Total liabilities                                                               804,967        476,048
                                                                               --------       --------
Preferred stock, $0.01 par value, 2,000,000 shares authorized,
  none issued at December 31, 1997 and 1996, respectively                            --             --
Common stock, $0.01 par value, 10,000,000 shares authorized,
  5,626,423 and 4,683,594 shares issued at December 31,
  1997 and 1996, respectively                                                        56             47
Additional paid-in capital                                                       59,926         49,014
Common stock acquired by ESOP, 349,649 and 308,513
  shares at cost at December 31, 1997 and 1996, respectively                     (2,428)        (2,571)
Common stock acquired by MRP, 166,754 and 160,644 shares at
  amortized cost at December 31, 1997 and 1996, respectively                     (1,285)        (1,538)
Retained earnings                                                                 1,680         10,357
Treasury stock acquired, 1,267,955 and 226,147 shares
  at cost at December 31, 1997 and 1996, respectively                           (16,071)        (2,517)
Net unrealized gain on investment and mortgage-backed
  securities available for sale, net of taxes                                     4,655            325
                                                                               --------       --------
Total stockholders' equity                                                       46,533         53,117
                                                                               --------       --------

Total liabilities and stockholders' equity                                     $851,500       $529,165
                                                                               ========       ========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       39

<PAGE>


Patriot Bank Corp. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)

<TABLE>
<CAPTION>
                                                              Year ended  December 31,
                                                         ---------------------------------
                                                          1997          1996         1995
                                                         ------        ------       ------
<S>                                                      <C>           <C>          <C>
Interest income
Interest-earning deposits                                  $193          $116         $201
Investment and mortgage-backed securities                23,048        11,049        2,865
Loans                                                    27,008        18,429       14,102
                                                         ------        ------        -----
Total interest income                                    50,249        29,594       17,168
                                                         ------        ------       ------

Interest expense
Deposits                                                 13,405         9,895        8,980
Short-term Borrowings                                    15,648         5,965          569
Long-term Borrowings                                      6,754         1,642           --
                                                         ------        ------        -----

Total interest expense                                   35,807        17,502        9,549
                                                         ------        ------        -----

Net interest income before provision for
  possible loan losses                                   14,442        12,092        7,619

Provision for possible loan losses                          915           305           60
                                                         ------        ------        -----

Net interest income after
  provision for loan losses                              13,527        11,787        7,559
                                                         ------        ------        -----

Non-interest income
Service fees, charges and other operating income            830           526          519
Gain on the sale of branch deposits and facility            885
(Loss) Gain on sale of real estate acquired through
  foreclosure                                                (9)           16           96
Gain (loss) on sale of investment and mortgage-backed
  securities available for sale                             438           (28)         (97)
Mortgage banking gains                                      186           123           --
                                                         ------        ------        -----

Total non-interest income                                 2,330           637          518
                                                         ------        ------        -----
Non-interest expense
Salaries and employee benefits                            7,048         4,324        3,048
Occupancy and equipment                                   1,952           978          658
Federal deposit insurance premiums                          132         1,814          439
Data processing                                             167           373          258
Advertising                                                 551           397          226
Deposit processing                                          307           253          236
Other operating expenses                                  1,001         1,059        1,286
                                                         ------        ------        -----

Total non-interest expense                               11,158         9,198        6,151
                                                         ------         -----        -----

Income before income taxes                                4,699         3,226        1,926

Income taxes                                              1,326         1,251          734
                                                         ------        ------        -----
Net income                                               $3,373        $1,975       $1,192
                                                         ======        ======       ======

Earning per share - basic                                 $0.78         $0.39
                                                          =====         =====
Earnings per share - diluted                              $0.74         $0.39
                                                          =====         =====

Dividends per share                                       $0.30         $0.18
                                                          =====         =====
</TABLE>

The accompanying notes are an integral part of these statements.

                                       40
<PAGE>


Patriot Bank Corp. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 1997,
1996 and 1995 
(in thousands)

<TABLE>
<CAPTION>
                                                                                                      Unrealized
                                                                                                        gains
                                                                                                     (losses) on
                                                     Additional                                       securities
                                Number of  Common     paid-in                     Retained  Treasury   available
                                 shares     stock     capital   ESOP      MRP     earnings    stock    for sale   Total
                                 ------     -----     -------   ----     -----    --------   -------   --------  -------
<S>                              <C>        <C>       <C>       <C>      <C>      <C>        <C>       <C>        <C>
Balance at January 1, 1995           --      --          --       --       --      18,701       --         (833)   17,868

Shares issued upon
  conversion                      3,769      38      36,614       --       --          --       --           --    36,652
Common stock acquired
  by ESOP                          (301)     --          --   (3,015)      --          --       --           --    (3,015)
Release of ESOP shares               30      --          86      301       --          --       --           --       387
Change in unrealized gains
  on securities available
  for sale, net of taxes             --      --          --       --       --          --       --        1,026     1,026
Net income                           --      --          --       --       --       1,192       --           --     1,192
                                  -----     ---     -------  -------  -------      ------ --------       ------   -------

Balance at December 31, 1995      3,498      38      36,700   (2,714)      --      19,893       --          193    54,110
                                  -----     ---     -------  -------  -------      ------ --------       ------   -------

Common stock issued                 134       1       1,731       --       --          --       --           --     1,732
Common stock acquired
  by MRP                           (134)     --          --       --   (1,732)         --       --           --    (1,732)
Amortization of MRP                  --      --          --       --      194          --       --           --       194
Treasury stock purchased           (188)     --          --       --       --          --   (2,517)          --    (2,517)
Stock dividend                      661       8      10,530       --       --     (10,538)      --           --        --
Release of ESOP shares               17      --          53      143       --          --       --           --       196
Change in unrealized gains
  on securities available
  for sale, net of taxes             --      --          --       --       --          --       --          132       132
Net income                           --      --          --       --       --       1,975       --           --     1,975
Cash dividends paid                  --      --          --       --       --        (973)      --           --      (973)
                                  -----     ---     -------  -------  -------      ------ --------       ------   -------

Balance at December 31, 1996      3,988     $47     $49,014  $(2,571) $(1,538)    $10,357  $(2,517)        $325   $53,117
                                  -----     ---     -------  -------  -------      ------ --------       ------   -------

Common stock issued                   5      --         102       --       --          --       --           --       102
Common stock acquired
  by MRP                             (5)     --          --       --     (102)         --       --           --      (102)
Treasury stock purchased           (830)     --          --       --       --          --  (13,554)          --   (13,554)
Stock dividend                      631       9      10,645       --       --     (10,654)      --           --        --
Release of MRP                       32      --          --       --      355          --       --           --       355
Release of ESOP shares               21      --         165      143       --          --       --           --       308
Change in unrealized gains
  on securities available
  for sale, net of taxes             --      --          --       --       --          --       --        4,330     4,330
Net income                           --      --          --       --       --       3,373       --           --     3,373
Cash dividends paid                  --      --          --       --       --      (1,396)      --           --    (1,396)
                                  -----     ---     -------  -------  -------      ------ --------       ------   -------

Balance at December 31, 1997      3,842     $56     $59,926  $(2,428) $(1,285)     $1,680 $(16,071)      $4,655   $46,533
                                  =====     ===     =======  =======  =======      ====== ========       ======   =======
</TABLE>


The accompanying notes are an integral part of these statements.

                                       41
<PAGE>


Patriot Bank Corp. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                                                             -----------------------------
                                                                               1997       1996       1995
                                                                             -------     ------      ------
<S>                                                                          <C>         <C>         <C>
Operating activities
Net Income                                                                     3,373      1,975       1,192
Adjustments to reconcile net income to net cash provided by
  operating activities
       Amortization and accretion of
          Deferred loan origination fees                                        (145)      (464)       (460)
          Premiums and discounts                                                 (94)       (39)        (71)
          MRP share                                                              355        194
       Provision for possible loan losses                                        915        305          60
       Release of ESOP shares                                                    308        196         387
       (Gain) loss on sale of  securities available for sale                    (438)        28          97
       Loss (gain) on sale of real estate owned                                    9        (16)        (96)
       Gain on sale of deposits and facility                                    (885)        --          --
       Depreciation of premises and equipment                                    762        259         187
       Mortgage loans originaterd for sale                                   (13,753)        --          --
       Mortgage loans sold                                                     9,658         --          --
       Decrease (increase) decrease in deferred income taxes                     459       (277)         96
       Increase in accrued interest receivable                                (1,470)    (1,444)        (29)
       Increase in other assets                                               (1,149)       (71)       (315)
       Increase (decrease) in other liabilities                                1,563      1,077         (39)
                                                                            --------     ------      ------
            Net Cash used by operating activities                               (532)     1,723       1,009
                                                                            --------     ------      ------
Investing activities
       Loan originations & principal payments on loans, net                 (142,265)   (85,643)    (25,309)
                                                                            --------     ------      ------
       Proceeds from the sale of securities - available for sale               4,280      3,918      10,249
       Proceeds from the maturity of securities - available for sale          26,740     16,784       5,289
       Proceeds from the maturity of securities - held to maturity            10,194      5,625          --
       Purchase of securities - available for sale                          (208,017)  (132,012)    (22,450)
       Purchase of securities - held to maturity                                  --    (74,418)     (1,251)
       Proceeds from sale of real estate owned                                    50        131         398
       Purchase of premises and equipment                                     (1,880)    (4,533)        (95)
       Proceeds from sale of premises and equipment                              300         --          --
                                                                            --------     ------      ------
          Net cash (used in by investing activities                         (310,598)  (270,148)    (33,169)
                                                                            --------     ------      ------
Financing activities
       Net increase in deposits                                               60,361     37,896      11,680
       Decrease from sale of deposits                                         (9,462)        --          --
       Proceeds from short term borrowings                                   171,089    135,595          --
       Proceeds from long term borrowings                                     87,200     86,000          --
       Proceeds from trust preferred securities                               18,417         --          --
       Increase (decrease) in advances from borrowers for                    
         taxes and insurance                                                     636        721         (49)
       Net proceeds from stock conversion                                         --         --      33,637
       Cash paid for dividends                                                (1,396)      (973)         --
       Purchase of Treasury Stock                                            (13,554)    (2,517)         --
                                                                            --------     ------      ------

Net cash provided by financing activities                                    313,291    256,722      45,268
                                                                            --------     ------      ------

Net (decrease) increase in cash and cash equivalents                           2,161    (11,703)     13,108

Cash and cash equivalents at beginning of year                                 6,853     18,556       5,448
                                                                            --------     ------      ------

Cash and cash equivalents at end of year                                       9,014      6,853      18,556
                                                                            ========    =======      ======
</TABLE>


The accompanying notes are an integral part of these statements.


                                       42

<PAGE>


Patriot Bank Corp. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a description of the significant accounting policies of Patriot
Bank Corp. and Subsidiaries (Patriot). Such accounting and reporting policies
conform with generally accounting principles and predominant practices within
the financial institution industry.

Patriot, through its subsidiaries, offers a broad range of lending, depository
and related financial services to small businesses and consumers primarily
through 13 community banking offices located in Berks, Bucks, Chester,
Montgomery, Northampton and Lehigh counties in Pennsylvania and through direct
mail and various electronic and telephonic means.

Patriot Bank principally competes with other banking and financial institutions
in its primary market communities. Commercial banks, savings banks, savings and
loan associations, credit unions and money market funds actively compete for
deposits and loans. Such institutions, as well as consumer finance and insurance
companies, may be considered competitors of Patriot with respect to one or more
of the services they render.

a. Basis of Financial Presentation

The accompanying financial statements include the accounts of the parent
company, Patriot Bank Corp. and its subsidiaries: Patriot Bank and its
subsidiaries, Marathon Management Company, Patriot Financial Center, Inc.,
Patriot Commercial Leasing Company, Inc., and Patriot Investment Company. All
material intercompany balances and transactions have been eliminated in
consolidation.

In preparing the consolidated financial statements, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.

The principal estimates that are particularly susceptible to significant change
in the near term relate to the allowance for possible loan losses, mortgage
servicing rights, and other real estate owned.

The evaluation of the adequacy of the adequacy of the allowance for possible
loan losses includes, among other factors, an analysis of historical loss rates,
by category, applied to current loan totals. However, actual losses may be
higher or lower than historical trends, which vary. Actual losses on specified
problem loans, which also are provided for in the evaluation, may vary from
estimated loss percentages, which are established based upon a limited number of
potential loss classifications.

In June 1997, the Financial Accounting Standards Board (FASB) has issued SFAS
No. 130, "Reporting of Comprehensive Income", which is effective for years
beginning after December 15, 1997. This new standard requires entities
presenting a complete set of financial statements to include details of
comprehensive income. Comprehensive income consists of net income or loss for
the current period and income, expenses, gains, and losses that bypass the
income statement and are reported directly in a separate component of equity.
Patriot has evaluated SFAS No. 130 and does not foresee a material effect on the
presentation of it's financial position or results of operation.

                                       43
<PAGE>


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", which is effective for all periods
beginning after December 15, 1997. SFAS 131 requires that public business
enterprises report certain information about operating segments in complete sets
of financial statements of the enterprise and in condensed financial statements
of interim periods issued to shareholders. It also requires that public business
enterprises report certain information about their products and services, the
geographic areas in which they operate, and their major customers. Patriot has
evaluated SFAS No. 131 and does not foresee a material effect on the
presentation of it's financial position or results of operation.

b. Investment and Mortgage-Backed Securities

Patriot classifies its investment and mortgage-backed securities in accordance
with Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Under SFAS No. 115, debt
securities that Patriot has the intent and ability to hold to maturity are
classified as held to maturity and reported at amortized cost. Securities
expected to be held for an indefinite period of time are classified as available
for sale and are carried at fair value, with unrealized gains and losses
reported as a separate component of stockholders' equity, net of estimated
income taxes. Securities that are bought and held principally for the purpose of
selling are classified as trading and reported at fair value, with unrealized
gains and losses included in earnings. Patriot has no securities held for
trading. Gains or losses on the sales of securities are recognized at trade date
utilizing the specific identification method.

c. Loans held for resale

Loans held for resale consist of residential mortgage loans originated by
Patriot. They are recorded at the lower of cost or estimated fair value on an
aggregate basis.

d. Loans and Allowance for Possible Loan Losses

Loans that management has the intent and ability to hold for the foreseeable
future or until maturity or payoff are stated at unpaid principal balances and
net of deferred loan origination fees and discounts. Interest is accrued and
credited to operations based upon the principal amount of loans outstanding.
Loan fees and certain direct loan origination costs are deferred, and the net
fee or cost is recognized as an adjustment to interest income using the interest
method over the contractual life of the loans, adjusted for estimated
prepayments based on Patriot's historical prepayment experience.

Management's periodic evaluation of the adequacy of the allowance for possible
loan losses is based on Patriot's past loss experience, known and inherent risks
in the portfolio, adverse situations that may affect the borrower's ability to
repay, the estimated value of any underlying collateral, and current economic
conditions. Such estimates are susceptible to change, and actual losses on
specific loans may vary from estimated losses. The allowance for possible loan
losses is increased by charges to income and decreased by charge-offs (net of
recoveries).

Uncollectible interest on loans that are contractually past due is charged off,
or an allowance is established based on management's periodic evaluation. The
allowance is established by a charge to interest income equal to all interest
previously accrued, and income is subsequently recognized only to the extent
that cash payments are received until, in management's judgment, the borrower's
ability to make periodic interest and principal payments is reestablished, in
which case the loan is returned to accrual status.

                                       44
<PAGE>


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

On January 1, 1995, Patriot adopted SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan," as amended by SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan: Income Recognition and Disclosures." SFAS No. 114 requires
that a creditor measure impairment based on the present value of expected future
cash flows discounted at the loan's effective interest rate, except that as a
practical expedient, a creditor may measure impairment based on a loan's
observable market price, or the fair value of the collateral if the loan is
collateral dependent. Regardless of the measurement method, a creditor must
measure impairment based on the fair value of the collateral when the creditor
determines that foreclosure is probable. SFAS No. 118 allows creditors to use
existing methods for recognizing interest income on impaired loans.

SFAS No. 114, as amended, applies to all loans that are identified for
evaluation, uncollateralized as well as collateralized, except large groups of
smaller-balance homogeneous loans that are collectively evaluated for
impairment. Those loans include residential mortgage, home equity and consumer
loans. Patriot's loan portfolio is substantially comprised of residential
mortgage, home equity and consumer loans; therefore, the adoption of SFAS No.
114 had no material effect on Patriot's consolidated financial position or
results of operations. Patriot's impaired loans at December 31, 1997 and 1996
were not significant.

e. Premises and Equipment

Land is carried at cost. Buildings, leasehold improvements and furniture,
fixtures and equipment are carried at cost less accumulated depreciation.
Depreciation is provided for by the straight-line method over the estimated
useful lives of the assets.

On January 1, 1996, Patriot adopted SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which
provides guidance on when to recognize and how to measure impairment losses of
long-lived assets and certain identifiable intangibles and how to value
long-lived assets to be disposed of. The adoption of SFAS No. 121 had no
material effect on the consolidated financial position or results of operations.

f. Accounting for Transfers and Servicing of Financial Assets and
   Extinguishments of Liabilities

On January 1, 1997 Patriot adopted SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," as amended by
SFAS No. 127, which provides accounting guidance on transfers of financial
assets, servicing of financial assets and extinguishments of liabilities.
Adoption of this new statement did not have a material impact on Patriot's
consolidated financial position or results of operations.

g. Employee Benefit Plans

Patriot has certain employee benefit plans covering substantially all employees.
Patriot accrues costs as incurred.

On January 1, 1996, Patriot adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," which contains a fair value-based method for valuing stock-based
compensation that entities may use, which measures compensation cost at the
grant date based on the fair value of the award. Compensation is then recognized
over the service period, which is usually the vesting period. Alternatively, the
standard permits entities to continue accounting for employee stock options and
similar instruments under APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Entities that continue to account for stock options using APB
Opinion No. 25 are required to make pro forma disclosures of net income and
earnings per share, as if the fair value-based method of accounting defined in
SFAS No. 123 had been applied. Patriot's employee stock option plan is accounted
for under APB Opinion No. 25.

                                       45
<PAGE>


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

h. Advertising Cost

Patriot expenses advertising costs as incurred.

i. Income Taxes

Deferred income taxes are provided on temporary differences between amounts
reported for financial statement and tax purposes in accordance with SFAS No.
109, "Accounting for Income Taxes."

j. Earnings per Shares

In 1997, Patriot adopted the provisions of SFAS No. 128, "Earnings per Share."
SFAS 128 eliminates primary and fully diluted earnings per share and requires
presentation of basic and diluted earnings per share in conjunction with the
disclosure of the methodology used in computing such earnings per share. Basic
earnings per share excludes dilution and is computed by dividing income
available to common shares by the weighted average common shares outstanding
during the period. Diluted earnings per share takes into account the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised and converted into common stock. Prior periods' earnings per
share calculations have been restated to reflect the adoption of SFAS No. 128.

k. Statement of Cash Flows

Cash and cash equivalents are defined as cash on hand, cash items in process of
collection and amounts due from banks. Interest-earning deposits consist of
deposit accounts with the Federal Home Loan Bank (FHLB) of Pittsburgh and
deposits with other financial institutions generally having maturities of three
months or less. Cash paid for interest on deposits was $13,368,000, $9,888,000
and $8,988,000 for the years ended December 31, 1997, 1996 and 1995,
respectively. Cash paid for income taxes was $1,982,000, $1,161,000 and
$6,701,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
Transfers from loans to real estate owned were $167,000, $31,000, and $218,000
for the years ended December 31, 1997, 1996 and 1995, respectively. Transfers of
investment securities from held to maturity to available for sale were $-0-,
$-0- and $6,000,000 for the years ended December 31, 1997,1996 and 1995,
respectively.

l. Reclassifications

Certain prior period amounts have been reclassified to conform with the current
year's presentation. These reclassifications had no effect on net income.

NOTE 2 - RESTRICTIONS ON CASH AND AMOUNTS DUE FROM DEPOSITORY INSTITUTIONS

Patriot is required to maintain certain average reserve balances as established
by the Federal Reserve Board. The amounts of those reserve balances for the
reserve computation periods, which included December 31, 1997 and 1996, were
$1,583,000 and $456,000, respectively.

                                       46
<PAGE>


NOTE 3 - INVESTMENT AND MORTGAGE-BACKED SECURITIES

The amortized cost and estimated fair value of investment and mortgage-backed
securities are as follows:

<TABLE>
<CAPTION>
                                                                           1997
                                                ------------------------------------------------------------
                                                                   Gross             Gross
                                                Amortized       Unrealized        Unrealized      Estimated
                                                  cost            Gains              Loss         Fair Value
                                                ---------       ----------        ----------      ----------
                                                                       (in thousands)
<S>                                             <C>             <C>                <C>            <C>
Available for Sale:
Investment securities:
U.S. Treasury and
  government agency
  securities                                     $19,884           $202               $--           $20,086
Commerce Bancorp, Inc.                             5,000            276                --             5,276
Other Corporate Securities                        12,493            998                --            13,491
FHLMC Stock                                       30,031          1,245                --            31,276
FHLB Stock                                        13,760             --                --            13,760
Equity securities                                  4,377          3,140                --             7,517
Mortgage-backed securities:
FHLMC                                             11,287            214                --            11,501
FNMA                                              20,163            185                94            20,254
GNMA                                              12,592            279                --            12,871
Collateralized mortgage
  obligations:
FHLMC                                             75,085            806               107            75,784
FNMA                                             118,778            503               437           118,844
Securitized Asset Sales, Inc.                      4,934             --                81             4,853
GE Capital MTG. Services, Inc.                     7,476             24                --             7,500
Other                                                112             --                --               112
                                                --------         ------              ----          --------
Total investment
  and mortgage-backed
  securities available for sale                 $335,972         $7,872              $719          $343,125
                                                ========         ======              ====          ========

Held to Maturity:
Investment securities:
U.S. Treasury and
  government agency
  securities                                      $1,035             $4                $5            $1,034
Corporate securities                               1,502             42                --             1,544
Collateralized mortgage
  obligations:
FHLMC                                              1,801              3                --             1,804
FNMA                                               9,775            112                --             9,887
Capstead Securities Corp. IV                       6,055             24                --             6,079
CMC Securities Corporation                         6,377             64                --             6,441
Other                                             35,971            150                93            36,028
                                                --------         ------              ----          --------

Total investment
  and mortgage-backed
  securities held to maturity                    $62,516           $399               $98           $62,817
                                                ========         ======              ====          ========
</TABLE>

                                       47
<PAGE>


NOTE 3 - INVESTMENT AND MORTGAGE-BACKED SECURITIES, CONTINUED

<TABLE>
<CAPTION>
                                                                           1996
                                               --------------------------------------------------------------
                                                                   Gross             Gross
                                               Amortized        Unrealized        Unrealized       Estimated
                                                 cost              Gains            Losses         Fair Value
                                               ---------        ----------        ----------       ----------
                                                                       (in thousands)
<S>                                            <C>              <C>               <C>              <C>
Available for Sale:
Investment securities:
U.S. Treasury and
  government agency
  securities                                     $5,023             $--               $33            $4,990
Equity securities                                23,797             695               --             24,492
Mortgage-backed securities:
FHLMC                                            14,582             149                22            14,709
FNMA                                             25,118             150               144            25,124
GNMA                                             14,498             253               --             14,751
Collateralized mortgage
  obligations:
FHLMC                                            37,928               7               296            37,639
FNMA                                             31,654              13               165            31,502
Other                                             5,976              --                35             5,941
                                               --------          ------              ----          --------

Total investment
  and mortgage-backed
  securities available for sale                $158,576          $1,267              $695          $159,148
                                               ========          ======              ====          ========

Held to Maturity:
Investment securities:
U.S. Treasury and
  government agency
  securities                                     $1,911             $--               $19            $1,892
Corporate securities                              2,506              27               --              2,533
Collateralized mortgage
  obligations:
Other                                            68,293             281               277            68,297
                                               --------          ------              ----          --------

Total investment
  and mortgage-backed
  securities held to maturity                   $72,710            $308              $296           $72,722
                                               ========          ======              ====          ========
</TABLE>


                                       48

<PAGE>


NOTE 3 - INVESTMENT AND MORTGAGE-BACKED SECURITIES, CONTINUED

The amortized cost and estimated fair value of investment and mortgage-backed
securities at December 31, 1997, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties:

<TABLE>
<CAPTION>

                                                                 Held to maturity             Available for sale
                                                              -----------------------      -------------------------
                                                              Amortized        Fair         Amortized         Fair
                                                                cost           value          cost            value
                                                              ---------       -------       ----------       -------
                                                                                  (in thousands)
<S>                                                           <C>             <C>           <C>              <C>
Investment and mortgage-backed securities
Due in one year or less                                        $12,728        $12,764        $16,018         $16,039
Due after one year through five years                           40,408         40,603         94,564          94,839
Due after five years through ten years                           9,380          9,450         80,569          80,845
Due after ten years                                                --              --         96,653          98,849
Equity Securities                                                  --              --         48,168          52,553
                                                               -------        -------       --------        --------

Total investment and mortgage-backed securities                $62,516        $62,817       $335,972        $343,125
                                                               =======        =======       ========        ========
</TABLE>


For purposes of the maturity table, mortgage-backed securities, which are not
due at a single maturity date, have been allocated over maturity groupings based
on the contractual maturities. The mortgage-backed securities may mature earlier
than their contractual maturities because of principal prepayments.

Proceeds from sales of investment and mortgage-backed securities and the
realized gross gains and losses from those sales are as follows:

<TABLE>
<CAPTION>

                                     Available for sale                        Held to maturity
                                  -----------------------------            ----------------------
                                   Year ended December 31,                 Year ended December 31,
                                  1997                    1996                      1995
                                 ------                   -----                   -------
                                                     (in thousands)
     <S>                         <C>                     <C>                <C>
     Proceeds from sales         $4,280                  $3,918                   $10,249
                                 ======                  ======                   =======

     Gross realized gains           438                     $75                       $--
     Gross realized losses           --                    (103)                      (97)
                                    ---                   -----                      ----

     Net realized gain (loss)      $438                    $(28)                     $(97)
                                   ====                    ====                      ====

</TABLE>

On November 15, 1995, the FASB issued a special report entitled "A Guide to
Implementation of Statement No. 115 on Accounting for Certain Investments in
Debt and Equity Securities." This guide allowed enterprises to reassess the
appropriateness of the classification of all securities held. Based on this
special report, Patriot reclassified $6,000,000 of securities from held to
maturity to available for sale. The transfer was made at fair value and resulted
in an estimated unrealized loss of $59,000 and a decrease in stockholders'
equity of $39,000 based on current market values.

Securities having an aggregate amortized cost of $335,000, $412,000 and $445,000
were pledged to secure public deposits at December 31, 1997, 1996 and 1995,
respectively.

                                       49
<PAGE>


NOTE 4 - LOANS RECEIVABLE

Loans receivable are summarized as follows:

<TABLE>
<CAPTION>

                                                                          December 31,
                                                                  ---------------------------
                                                                    1997               1996
                                                                  --------           --------
                                                                       (in thousands)
<S>                                                               <C>                <C>
Real estate loans
First mortgages secured by one- to four-family
  residences                                                      $302,684           $192,518
Home equity and second mortgage                                     77,070             72,480
Construction                                                         4,039              3,210
Multi-family and commercial                                         36,957             11,822
                                                                  --------           --------
                                                                   420,750            280,030
Consumer loans                                                       3,853              2,546
                                                                  --------           --------

Total loans receivable                                             424,603            282,576
Less deferred loan origination fees                                 (2,394)            (2,392)
                                                                  --------           --------

Total loans receivable, net                                       $422,209           $280,184
                                                                  ========           ========
</TABLE>


Activity in the allowance for possible loan losses is summarized as follows:

<TABLE>
<CAPTION>
                                                   1997             1996            1995
                                                  ------            ------         ------
                                                               (in thousands)
<S>                                               <C>              <C>             <C>
Balance at beginning of year                      $1,830            $1,702         $1,720

Provision for possible loan losses                   915               305             60
Loans charged off                                   (276)             (177)           (81)
Recoveries                                            43                --              3
                                                  ------            ------         ------
Balance at end of year                            $2,512            $1,830         $1,702
                                                  ======            ======         ======
</TABLE>


Non-performing loans, consisting of all loans 90 days past due and certain other
loans for which the accrual of interest has been discontinued, were $1,112,000
and $568,000 at December 31, 1997 and 1996, respectively. Interest income that
would have been recorded under the original terms of such loans and the interest
income actually recognized are summarized as follows:

<TABLE>
<CAPTION>
                                                             1997           1996         1995
                                                             ----           ----         ----
                                                                      (in thousands)
<S>                                                          <C>           <C>           <C>
Interest income that would have been recorded                 $71            $53          $53
Interest income recognized                                    (21)           (17)         (14)
                                                              ---           ----          ---

Interest income foregone                                      $50            $36          $39
                                                              ===            ===          ===
</TABLE>

                                       50
<PAGE>


NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                                 Estimated
                                                useful lives      1997        1996
                                                ------------     -------     ------
                                                              (in thousands)
<S>                                             <C>              <C>         <C>
Land                                                --           $1,255      $1,220
Buildings                                          30-40          6,051       5,966
Furniture, fixtures and equipment                   3-7           4,059       2,969
Leasehold improvements                              15              655         506
                                                    --           ------      ------

                                                                 12,020      10,661

             Less accumulated depreciation                       (3,478)     (2,937)
                                                                 -------     ------

                                                                 $8,542      $7,724
                                                                 ======      ======
</TABLE>


NOTE 6 - DEPOSITS

Deposits and their average rates are summarized as follows:

<TABLE>
<CAPTION>
                                                              1997                          1996
                                                       ---------------------        ---------------------
                                                                     Average                      Average
                                                       Balance        rate           Balance        rate
                                                       -------       ------         --------       ------
                                                                        (in thousands)
<S>                                                    <C>           <C>            <C>            <C>
NOW deposits                                           $16,908        0.61%          $17,842        0.49%
Money market                                            51,696        4.44            33,411        4.57
Savings accounts                                        24,510        2.38            27,712        2.38
Non-interest-bearing demand                             11,117          --             3,433          --
                                                       -------      ------          --------        ----

Total demand, transaction, money market and            104,231        2.86            82,398        2.76
savings deposits
Certificates of deposit                                185,297        5.87           157,116        5.76
                                                      --------        ----          --------        ----
Total                                                 $289,528        4.79%         $239,514        4.73%
                                                      ========        ====          ========        ====
</TABLE>


The aggregate amount of certificates of deposit with minimum denominations of
$100,000 or more totaled approximately $41,788,000 and $19,357,000 at December
31, 1997 and 1996, respectively. At December 31, 1997, Patriot has one company
who's certificates of deposits totaled approximately $30,490,000.

At December 31, 1997, scheduled maturities of certificates of deposit were as
follows:

                       1998                            $91,399
                       1999                             70,384
                       2000                             10,985
                       2001                              1,586
                       2002                              2,048
                    Thereafter                           8,895
                                                      --------
                                                      $185,297
                                                      ========

                                       51
<PAGE>


NOTE 7 - FHLB ADVANCES

a. SHORT TERM
   Short-term advances from the FHLB have maturities of less than one year.
   These advances are collateralized by FHLB stock and certain first mortgage
   loans and mortgage-backed securities. Short-term borrowings are summarized as
   follows:

   <TABLE>
   <CAPTION>
                                                                              1997          1996
                                                                            --------       --------
                                                                               (In thousands)
   <S>                                                                      <C>            <C>
   Balance at year-end                                                      $171,000       $134,000
   Maximum amount outstanding at any month-end during the period            $213,000       $183,500
   Average amount outstanding during each period                            $155,042       $106,855
   Weighted average interest rate on short-term borrowings                      5.76%          5.50%
   </TABLE>


b. LONG TERM
   At December 31, 1997 and 1996, long-term advances from the FHLB totaling
   $104,200 and $76,000 have maturities of one to ten years. These advances are
   collateralized by FHLB stock and certain first mortgage loans and
   mortgage-backed securities.

   At December 31, 1997, the outstanding long-term borrowings mature as follows
   (in thousands):

                        1998                                   0
                        1999                              19,000
                        2000                                   0
                        2001                                   0
                        2002                              85,000
                     Thereafter                              200
                                                         -------
                                                         104,200

NOTE 8 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

a. SHORT TERM
   Patriot enters into sales of securities under agreements to repurchase. These
   transactions are reflected as a liability on the accompanying Consolidated
   Balance Sheets. The dollar amount of securities underlying the agreements
   remains in the asset account, although the securities underlying the
   agreements are delivered to primary dealers who manage the transactions. At
   December 31, 1997 and 1996, all of the agreements were to repurchase
   identical securities.

   Short-term repurchase agreements generally have maturities of less than one
   year. These repurchase agreements are collateralized by certain
   mortgage-backed, agency and corporate securities. Short-term repurchase
   agreements are summarized as follows:

<TABLE>
<CAPTION>
                                                                                       1997           1996
                                                                                     --------        -------
                                                                                         (In thousands)
   <S>                                                                               <C>             <C>
   Balance at year-end                                                               $214,684        $11,595
   Maximum amount outstanding at any month-end during the period                     $221,962        $11,595
   Average amount outstanding during each period                                     $115,593           $254
   Weighted average interest rate on short-term borrowings                               5.77%          6.40%

   Mortgage-backed securities underlying the agreements at year-end:
          Carrying value                                                             $227,629        $23,287
          Estimated fair value                                                       $227,629        $23,287

</TABLE>


                                       52

<PAGE>


NOTE 8 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS, CONTINUED

b. LONG TERM
   At December 31, 1997 and 1996 long-term repurchase agreements totalling $0
   and $10,000 generally have maturities of one to two years. These repurchase
   agreements are collateralized by certain mortgage-backed securities.


NOTE  9 - TRUST PREFERRED SECURITIES

On May 29, 1997, Patriot issued $19,000,000 of 10.30% junior subordinated
debentures to Patriot Capital Trust I, a Delaware Business Trust, in which
Patriot owns all of the common equity. The trust issued $19,000,000 of preferred
securities to investors, secured by the junior subordinated debentures and the
guarantee of Patriot. Although the junior subordinated debentures will be
treated as debt of Patriot, they currently qualify for Tier I capital treatment,
subject to certain limitations, under risk-based capital guidelines of the
Federal Reserve. The Trust Preferred Securities are callable by the Company on
or after July 1, 2007, or earlier in the event the deduction of related interest
for federal income taxes is prohibited, treatment as Tier I capital is no longer
permitted or certain other contingencies arise. The Trust Preferred Securities
must be redeemed upon maturity of the debentures in 2027.

NOTE 10 - EQUITY TRANSACTIONS

On July 28, 1997 Patriot completed a tender offer to purchase 449,537 (539,444
after 20% stock dividend) shares at $18.00 per share.

On August 25, 1997, Patriot announced a 20% stock dividend. The stock
distribution was made on September 22, 1997 to stockholders of record on
September 8, 1997.

On October 25, 1996, Patriot announced a 20% stock dividend. The stock
distribution was made on November 21, 1996 to stockholders of record on November
7, 1996. At December 31, 1997 and 1996 shares outstanding were 4,358,000 and
4,457,000 respectively. All share amounts have been retroactively adjusted for
stock dividends.

In July 1995, the Board of Directors of Patriot Bank adopted an overall Plan of
Conversion (the Conversion), as amended on August 30, 1995, pursuant to which
Patriot Bank converted from a federally chartered mutual savings bank to a
federally chartered capital stock savings bank. All of Patriot Bank's
outstanding capital stock was acquired by Patriot, a newly organized Delaware
corporation which became the holding company for Patriot Bank. The conversion
was completed on December 1, 1995 when Patriot issued 3,769,125 (not effected
for stock dividends) shares of common stock to the public. The provisions of
SFAS No. 128, "Earnings Per Share," are not applicable for the year ended
December 31, 1995.



                                       53
<PAGE>


Note 11 - BRANCH SALE

      On November 21, 1997 Patriot completed the sale of a community banking
office and $10,350,000 of deposits form that office at a 7.5% premium Patriot
recognized a gain from the sale of the deposits and the physical facility of
approximately $885,000

NOTE 12 - INCOME TAXES

Applicable income taxes in the consolidated statements of income are as follows:

<TABLE>
<CAPTION>
                                            1997            1996              1995
                                           -------          ------             ----
                                                        (in thousands)
<S>                                        <C>             <C>                <C>
Current
Federal                                    $1,301           $1,306            $525
State                                         109              222             113
APIC from Stock Compensation                   55               --              --
                                           ------           ------            ----
Total current                               1,465            1,528             638
                                            =====            -----             ---

Deferred
Federal                                       (39)            (277)             96
State                                        (100)              --              --
                                           ------           ------            ----

Total deferred                               (139)            (277)             96
                                           ------           ------            ----

Applicable income taxes                    $1,326           $1,251            $734
                                           ======           ======            ====

Effective tax rate                           28.2%            38.8%           38.1%
                                           ======           ======            ====
</TABLE>



                                       54
<PAGE>


NOTE 12 - INCOME TAXES, CONTINUED

The income tax provision reconciled to taxes computed at the statutory federal
rate is as follows:

<TABLE>
<CAPTION>

                                                       1997        1996        1995
                                                       ----        ----        ----
<S>                                                    <C>         <C>         <C>
Federal tax expense at statutory rate                  35.0%       35.0%       35.0%
Adjustment resulting from:
State tax, net of federal tax benefit                    .8         2.3         3.7
Tax-exempt interest and dividend income                (9.0)       (1.4)       (0.1)
ESOP expense                                            1.2         0.6         1.6
MRP expense                                            (1.2)        1.5          --
Other                                                   1.4         0.8        (2.1)
                                                       ----        ----         ----

Income taxes                                           28.2%       38.8%       38.1%
                                                       ====        ====         ====

</TABLE>


                                                     1997          1996
                                                   --------        -----
                                                       (in thousands)
Deferred tax assets
Deferred loan fees                                     $184        $288
Allowance for possible loan losses                      854         579
Uncollectible interest                                   18          23
Non-qualified pension plan                               14          14
MRP expense                                              66          68
State NOL carryovers                                    100          --
Reserves                                                 11          --
                                                   --------        ----
Total deferred tax assets                            $1,247        $972
                                                   ========        ====


Deferred tax liabilities
Depreciation                                           $368        $211
Discount accretion                                      134          87
Pension plan                                             --          15
Gain on sale of loans                                    48         100
Excess loan servicing fees                               --          --
Unrealized gain on securities
available for sale                                    2,498         228
                                                   --------        ----
Total deferred tax liabilities                        3,048         641
                                                   --------        ----

Net deferred tax (liability) asset                  ($1,801)       $331
                                                   ========        ====


Based on management's evaluation of the likelihood of realization, no valuation
allowance has been provided against deferred tax benefits.

                                       55
<PAGE>


NOTE 12 - INCOME TAXES, CONTINUED

Prior to 1996, the Bank was permitted to deduct a percentage of its taxable
income as an addition to a bad debt reserve for tax purposes regardless of the
Bank's charge-off experience. This special deduction was repealed for taxable
years following 1995. The Bank is now required to compute its bad debt
deductions for tax purposes using the specific charge-off method. At December
31, 1997, 1996, and 1995 the Bank's tax bad debt reserve was approximately $ 4.0
million.

The Bank is not required to recapture its tax bad debt reserve into taxable
income as long as the Bank continues to operate as a bank under federal tax law
and does not use the reserve to fund dividends or redeem its stock. In
accordance with SFAS No. 109, the Bank has not recorded any deferred tax
liability on of its tax bad debt reserve. The tax that would be paid were the
Bank ultimately required to recapture of the reserve would amount to
approximately $1.4 million.



                                       56
<PAGE>



NOTE 13 - EARNINGS PER SHARE

Patriot's calculation of earnings per share in accordance with SFAS No. 128,
"Earnings Per Share" is as follows:


<TABLE>
<CAPTION>
                                                         For Year Ended December 31, 1997
                                                    --------------------------------------------
                                                     Income            Shares          Per-Share
                                                    Numerator       (Denominator)       Amount
                                                    ---------        -----------       ---------
<S>                                                <C>              <C>                <C>
Basic EPS
Net Income available to common
  stockholders                                        $3,373            4,350            $0.78

Effect of Dilutive Securities
  Options                                                 --              204             (.04)
                                                      ------            -----            -----
                                                      
Diluted EPS
Net income available to common
  stockholders plus assumed conversions               $3,373            4,554            $0.74
                                                      ======            =====            =====
</TABLE>


Options to purchase 3,600 shares of common stock at $18.02 were outstanding
during the year. They were not included in the computation of diluted EPS
because the option exercise price was greater than the average market price.



<TABLE>
<CAPTION>
                                                         For Year Ended December 31, 1996
                                                --------------------------------------------------
                                                 Income                Shares           Per-Share
                                                Numerator          (Denominator)         Amount
                                                ---------          -------------        ----------
<S>                                             <C>                <C>                  <C>
Basic EPS
Net Income available to common
  stockholders                                   $1,975                5,048             $0.39

Effect of Dilutive Securities
  Options                                            --                   61                --
                                                 ------                -----             -----
Diluted EPS
Net income available to common
  stockholders plus assumed conversions          $1,975                5,109             $0.39
                                                 ======                =====             =====
</TABLE>


All option at December 31, 1996 had exercise prices less than the average market
price, accordingly they have all been included in the above calculation.

As a result of the conversion completed in December 1995, EPS for the year ended
December 31, 1995 was not applicable.


                                       57
<PAGE>


NOTE 14 - EMPLOYEE BENEFIT PLANS

a. Pension Plan

Effective December 31, 1996, the Board of Directors approved the termination of
Patriot's non-contributory defined benefit pension plan. Previously, the plan
covered substantially all full time employees meeting certain eligibility
requirements. As a result of this termination, all participating employees
became fully vested under the plan. Distributions of the participants' vested
benefits took place in the fourth quarter of 1997. Such distributions were in
the form of cash payouts and rollovers into Patriot's 401(k) plan. In accordance
with SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of
Defined Pension Plans and for Terminated Benefits", both a settlement and
curtailment had occurred. For the year ended December 31, 1997, the loss
associated with the settlement and curtailment of this plan was not significant.
No gain or loss was recognized for the year ended December 31, 1996.

b. 401(k) Plan

Patriot maintains a 401(k) plan covering all of its employees who have attained
age 21 and have completed at least one year of service. Effective January 1,
1997, the 401(k) plan has been amended whereby all eligible employees will
receive a contribution to the plan equal to 3% of their base salary prior to
January 1, 1997. Subsequent to January 1997 Patriot will contribute 100% of an
employee's contribution up to 3% of base salary and 50% of an employee's
contribution between 3% and 6% of base salary. Prior to 1997, Patriot
contributed 50% of an employee's contribution, up to 6% of salary. Patriot's
contributions were $143,000, $35,000 and $32,000 for the years ended December
31, 1997, 1996 and 1995, respectively.

c. Employee Stock Ownership Plan

In 1995, Patriot established an internally leveraged Employee Stock Ownership
Plan (ESOP) for eligible employees who have completed one year of service with
Patriot or its subsidiaries. In December 1995, the ESOP borrowed $3,015,000 from
Patriot to purchase 434,000 (as adjusted for subsequent stock dividends) newly
issued shares of common stock. Patriot makes contributions to the ESOP equal to
the ESOP's debt service less any dividends received by the ESOP. Any dividends
received by the ESOP are used to pay debt service. The ESOP shares are pledged
as collateral for its debt. As the debt is repaid, shares are released from
collateral and allocated to qualifying employees based on the proportion of debt
service paid in the year. Patriot accounts for its ESOP in accordance with
Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership
Plans." Accordingly, the debt of the ESOP is recorded as debt and the shares
pledged as collateral are reported as unearned ESOP shares in the consolidated
Balance Sheets. As shares are released from collateral, Patriot reports
compensation expense equal to the current market price of the shares, and the
allocated shares are included in outstanding shares for earnings per share
computations. Dividends on allocated ESOP shares are recorded as a reduction of
retained earnings; dividends on unallocated ESOP shares are recorded as a
reduction of debt and accrued interest. ESOP compensation expense was $308,000,
$194,000 and $387,000 in 1997, 1996 and 1995, respectively. The ESOP shares as
of December 31, 1997 were as follows:

          Allocated shares                                 85,000
          Unreleased shares                               349,000
                                                       ----------

          Total ESOP shares                               434,000
                                                       ==========

          Fair value of unreleased shares              $7,395,000
                                                       ==========

                                       58
<PAGE>


NOTE 14 - EMPLOYEE BENEFIT PLANS, CONTINUED

d. Stock-Based Compensation

Patriot maintains a Management Recognition Plan (MRP). The MRP provides that up
to 217,000 shares of common stock may be granted, at the discretion of the
Board, to key directors and officers at no cost to the individuals. Patriot
granted 193,000 shares in 1996 and 6,000 (as adjusted for subsequent stock
dividends) shares in 1997 in the form of restricted stock payable over five
years from the date of grant. The recipients of the restricted stock are
entitled to all voting and other stockholder rights, except that the shares,
while restricted, may not be sold, pledged or otherwise disposed of and are
required to be held in escrow. In the event the recipient terminates association
with Patriot for reasons other than death, disability or change in control, the
recipient forfeits all rights to the allocated shares under restriction which
are canceled and revert to Patriot for reissuance under the plan. Shares
acquired by the MRP were newly issued shares and were recorded at the date of
award based on the market value of shares. Shares acquired by the MRP, which are
shown as a separate component of stockholders' equity, are being amortized to
expense over the five-year vesting period. As shares are vested during this
five-year period, Patriot records compensation expense equal to the shares being
amortized. For the years ended December 31, 1997 and 1996, $355,000 and $194,000
was amortized to expense. At December 31, 1997, 18,000 shares were reserved for
future grants under the plan.

Patriot maintains stock option plan. The stock option plan is accounted for
under APB Opinion No. 25 and related interpretations. The plan permits the grant
of options to employees and directors for up to 542,000 shares of common stock.
The options have a term of 10 years and vest over a five-year period. The
exercise price of each option equals the market price of Patriot's stock on the
date of grant. Accordingly, no compensation cost has been recognized for the
plan. Had compensation cost for the plan been determined based on the fair value
of the options at the grant dates consistent with the method of SFAS No. 123,
Patriot's 1997 and 1996 net income and earnings per share would have been
reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                 1997                             1996
                                     --------------------------       ----------------------------
                                     As reported     Pro-forma        As reported       Pro forma
                                     ------------    ----------       -----------       ----------
<S>                                  <C>             <C>               <C>              <C>
Net income                            $3,373,000     $3,110,000        $1,975,000       $1,841,000
Earnings per share - basic                 $0.78          $0.72             $0.39            $0.36
Earnings per share - diluted               $0.74          $0.68             $0.39            $0.36
</TABLE>


                                       59
<PAGE>


NOTE 14 - EMPLOYEE BENEFIT PLANS, CONTINUED

A summary status of Patriot's option plans as of December 31, 1997 and 1996 and
the charges during the years ending on those dates is presented below:

<TABLE>
<CAPTION>

                                                                     1997                      1996
                                                              -------------------      --------------------
                                                                         Weighted                  Weighted
                                                                          Average                   Average
                                                              Shares       Price       Shares       Price
                                                              -------    --------     --------     --------
<S>                                                          <C>         <C>          <C>          <C>
Outstanding, beginning of year                                510,000      $8.98           --           --

Granted                                                         7,000      16.38      510,000        $8.98
                                                              -------      -----      -------        -----
Outstanding at year-end                                       517,000      $9.08      510,000        $8.98
                                                              =======      =====      =======        =====

Options exercisable at year-end                               102,000                      --
                                                              =======                 =======

Weighted average fair value of
   options granted during the year                                         $6.68                     $3.42
                                                                           =====                     =====
</TABLE>


The fair value of each option grant is estimated on the date of grant using the
Black-Scholes options-pricing model as follows:

<TABLE>
<S>                                                                        <C>          <C>
Assumptions:
  Dividend yield                                                            2.40%        2.40%
  Expected volatility                                                      33.30%       22.90%
  Risk-free interest rate                                                   6.47%        6.50%
</TABLE>


The following table summarizes information about non-qualified options
outstanding at December 31, 1997:

<TABLE>
<CAPTION>
                                            Options Outstanding                         Options Excercisable
                            -------------------------------------------------    ----------------------------------

                              Number             Weighted                            Number
                           Outstanding at        Average          Weighted        Outstanding at       Weighted
    Range of                December 31,        Remaining          Average         December 31,         Average
Excercise Prices                1997        Contractual Life    Exercise Price         1997         Excercise Price
-----------------          -------------    ----------------    --------------    --------------    ---------------
<S>                        <C>              <C>                 <C>               <C>               <C>
          $8.98               510,000           8.5 years            $8.98           102,000            $8.98
$14.74 - $18.02                 7,200           9.5 years           $16.38              --             $16.38
</TABLE>


                                       60

<PAGE>


NOTE 15 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATIONS
OF CREDIT RISK

Patriot is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers,
including commitments to extend credit. Those instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amount
recognized in the consolidated Balance Sheets. The contract or notional amounts
of those instruments reflect the extent of Patriot's involvement in particular
classes of financial instruments.

Patriot's exposure to credit loss in the event of non-performance by the other
party to the financial instrument for commitments to extend credit is
represented by the contractual notional amount of those instruments. Patriot
uses the same credit policies in making commitments and conditional obligations
as it does for on-balance-sheet instruments. Unless noted otherwise, Patriot
requires collateral to support financial instruments with credit risk.

The contractual or notional amounts of outstanding loan commitments as of
December 31, 1997 are as follows:

<TABLE>
<CAPTION>
                                                                                       Total
                                              Fixed rate        Variable rate        commitments
                                              commitments        commitments         outstanding
                                              -----------       -------------        -----------
                                                                (in thousands)
<S>                                           <C>               <C>                  <C>
Financial instruments whose contract
amounts represent credit risk
Mortgage loans                                   $3,059              $1,093             $4,152
Consumer and other loans                            388              21,387             21,775
Commercial lines of credit                           --              20,074             20,074
Construction loans                                3,662                 --               3,662
                                                  -----                 --               -----

                                                 $7,109             $42,554            $49,663
                                                 ======             =======            =======

Financial instruments whose notional
or contract amounts exceed the
amount of the credit risk

Interest rate cap                                    --              50,000             50,000
Interest rate floor                                  --              50,000             50,000

</TABLE>

Fees received in connection with these commitments are recognized as income over
the life of the commitment or the life of the loan.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Patriot evaluates each customer's creditworthiness on
a case-by-case basis. The amount of collateral obtained, if deemed necessary by
Patriot upon extension of credit, is based on management's credit evaluation of
the borrower. Collateral for commitments generally includes residential or other
real estate.

                                       61
<PAGE>


NOTE 15 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
AND CONCENTRATIONS OF CREDIT RISK, CONTINUED

Interest rate cap and floor agreements are instruments used by Patriot to manage
its interest rate risk. An interest rate cap is an agreement whereby the seller
of the cap contractually agrees to pay the buyer the difference between the
actual interest rate and strike rate per the cap contract, if the actual rate is
higher than the strike rate. An interest rate floor is an agreement whereby the
seller of the floor contractually agrees to pay the buyer the difference between
the actual interest rate and the strike rate of the floor contract, if the
actual rate is lower than the strike rate.

NOTE 16 - COMMITMENTS AND CONTINGENCIES

a. Lease Commitments

Patriot is committed to various operating leases related to branch facilities
having initial or remaining terms in excess of one year. The minimum annual
rental commitments under these leases outstanding at December 31, 1997 are as
follows:

                    1998                      $206,552
                    1999                       180,000
                    2000                       180,000
                    2001                       196,817
                    2002                       219,600
                   Thereafter                2,042,758
                                             ---------
                                             3,025,727
                                             =========

Total rental expense for all leases for the year ended December 31, 1997 and
1996 totaled $184,516 and $54,815, respectively. There were no leases in 1995.

b. Other

Patriot is a defendant in various legal actions arising from normal business
activities. Management believes that those actions are without merit or that the
ultimate liability, if any, resulting from such actions will not have a material
adverse effect on Patriot's consolidated financial position or results of
operations.

                                       62

<PAGE>


NOTE 17 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires
disclosure of the estimated fair value of Patriot's assets and liabilities
considered to be financial instruments. As with most financial institutions, the
majority of Patriot's assets and liabilities are considered financial
instruments as defined in SFAS No. 107. However, many of such instruments lack
an available trading market, as characterized by a willing buyer and seller
engaging in an exchange transaction. Also, it is Patriot's general practice and
intent to hold the preponderance of its financial instruments to maturity and
not to engage in trading or sales activities. Therefore, Patriot has used
significant estimates and present value calculations to prepare this disclosure.
Changes in the assumptions or methodologies used to estimate fair value may
affect the estimated amounts.

Fair values have been estimated using data which management considered the best
available. Fair value of financial instruments actively traded in a secondary
market has been estimated using quoted market prices. The fair value of loans
receivable has been estimated using present value cash flow, discounted at an
interest rate that gives effect to estimated prepayment risk and credit loss
factors. Fair value of financial instrument liabilities with no stated
maturities has been estimated to equal the carrying amount. Fair value of
financial instrument liabilities with stated maturities has been estimated using
present value cash flow, discounted at a rate approximating current market rates
for similar assets and liabilities. The resulting estimated fair values and
carrying amounts at December 31, 1997 and 1996, respectively were as follows:

<TABLE>
<CAPTION>
                                                        1997                          1996
                                              -------------------------      ----------------------
                                              Estimated                      Estimated
                                                fair           Carrying        fair        Carrying
                                                value           amount         value        amount
                                              ---------        --------      ---------     --------
                                                                  (in thousands)
<S>                                            <C>             <C>            <C>            <C>
Financial Assets:
     Cash and cash equivalents                  $9,014           $9,014        $6,853        $6,853

     Investment and mortgage-backed
       securities available for sale           343,125          343,125       159,148       159,148
     Investment and mortgage-backed
       securities held to maturity              62,817           62,516        72,722        72,710
     Total Loans receivable (net)              426,557          423,792       280,468       278,354
Financial Liabilities:
     Deposits with no stated maturities        104,231          104,231        82,398        82,398
     Deposits with stated maturities           185,532          185,297       158,888       157,116
     Borrowings                                516,149          508,301       229,947       231,595
Off-balance sheet items
     Commitments to extend credit               49,663           49,663        18,996        18,996
     Caps and floors                                 5              317            --            --

</TABLE>


                                       63
<PAGE>


NOTE 18 - REGULATORY MATTERS

On May 22, 1997, Patriot Bank completed its conversion from a federally
chartered savings bank to a state chartered commercial bank. Effective with the
charter conversion Patriot Bank's regulators changed from the OTS to the State
of Pennsylvania and the FDIC. Patriot Bank Corp. is regulated by the Federal
Reserve.

Patriot is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory - and possible additional discretionary - actions by
regulators that, if undertaken, could have a direct material effect on Patriot's
consolidated financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, Patriot must meet specific
capital guidelines that involve quantitative measures of Patriots assets,
liabilities and certain off-balance sheet items as calculated under regulatory
accounting practices. Patriot's capital amounts are also subject to qualitative
judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require Patriot to maintain minimum amounts and ratios (set forth in the table
below) of total and core capital (as defined in the regulations) to
risk-weighted assets, and of core capital to adjusted assets. Management
believes, as of December 31, 1997, that Patriot meets all capital adequacy
requirements to which it is subject.

As of December 31, 1997, the most recent notification from the Department of
Banking of the Commonwealth of Pennsylvania categorized Patriot as well
capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, Patriot must maintain minimum total risk-based,
core risk-based and core leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the institutions category.

<TABLE>
<CAPTION>

                                                               Required to be          Required to be
                                                                 Adequately                 Well
                                           Actual               Capitalized             Capitalized
                                      -----------------        ---------------     ----------------------
                                       Amount     Ratio        Amount    Ratio      Amount         Ratio
                                      --------    -----        --------  -----     --------        ------
                                                                (in thousands)
<S>                                   <C>         <C>          <C>       <C>       <C>             <C>
As of December 31, 1997
    Total capital (to risk weighted
      assets)

    Patriot Bank Corp.                $62,807     14.54%       $34,567     8%      $43,208           10%
    Patriot                            44,100     10.77%        32,748     8%       40,936           10%

    Tier I capital (to risk-weighted
      assets)

    Patriot Bank Corp.                 55,837     12.92%        17,283     4%       25,925            6%
    Patriot                            41,588     10.16%        16,374     4%       24,561            6%

    Tier I capital (to average assets)

    Patriot Bank Corp.                 55,837      7.90%        28,282     4%       35,353            5%
    Patriot                            41,588      6.12%        27,204     4%       34,005            5%
</TABLE>


Patriot Bank is subject to regulations of certain regulatory agencies and,
accordingly, is periodically examined by such regulatory authorities. As a
consequence of the regulation of banking activities, Patriot Bank's operations
are susceptible to changes in legislation and regulations.


                                       64
<PAGE>


NOTE 18 - REGULATORY MATTERS, CONTINUED

On September 30, 1996, the Deposit Insurance Funds Act of 1996 (the Funds Act)
was signed into law which, among other things, imposed a special one-time
assessment on Savings Association Insurance Fund (SAIF) member institutions,
including Patriot Bank, to recapitalize the SAIF. As required by the Funds Act,
the Federal Deposit Insurance Corporation (FDIC) imposed a special assessment of
65.7 basis points on SAIF assessable deposits held as of March 31, 1995, payable
November 27, 1996. The special assessment was recognized as a tax-deductible
expense in 1996. Patriot recorded a special after-tax charge of $836,000
($1,338,000 before-tax) as a result of the FDIC special assessment.

The Funds Act also spreads the obligations for payment of the Financing
Corporation (FICO) bonds across all Bank Insurance Fund (BIF) and SAIF members.
Beginning on January 1, 1997, BIF deposits will be assessed for FICO payments at
a rate of 20% of the rate assessed on SAIF deposits. Based on current estimates
by the FDIC, BIF deposits will be assessed a FICO payment of 1.3 basis points,
while SAIF deposits will pay an estimated 6.5 basis points on the FICO bonds.
Full pro rata sharing of the FICO payments between BIF and SAIF members will
occur on the earlier of January 1, 2000 or the date the BIF and SAIF are merged.
The Funds Act specifies that the BIF and SAIF will be merged on January 1, 1999,
provided the savings associations remain as of that time.

In conformity with Patriot's charter, a "liquidation account" was established
for Patriot Bank at the time of its conversion to the stock form of ownership.
In the unlikely event of a complete liquidation of Patriot Bank, holders of
savings accounts with qualifying deposits, who continue to maintain their
savings accounts, would be entitled to a distribution from the "liquidation
account" in an amount equal to the then current adjusted savings account balance
before any liquidation distribution could be made with respect to capital stock.
The balance in the "liquidation account" was $11,487,000 at December 31, 1997.
This amount may not be utilized for the payment of cash dividends to the holding
company.

For the period ended December 31, 1996 Patriot was regulated by the (OTS) Office
of Thrift thus 1996 capital ratios are calculated under OTS guidelines.

The following schedule summarizes the actual capital balances and ratios of
Patriot Bank at December 31, 1996:

<TABLE>
<CAPTION>
                                      Tangible          Leverage            Leverage            Risk-based
                                      capital        (core) capital        (core) capital        capital to
                                    to tangible       to tangible        to risk-adjusted      risk-adjusted
                                      assets             assets              assets               assets
                                    -----------      --------------      ----------------      -------------
                                                             (in thousands)
<S>                                 <C>              <C>                 <C>                   <C>
Regulatory capital                    $32,049            $32,049             $32,049              $33,879
Minimum capital requirement             7,490             14,980               9,944               19,889
                                      -------            -------             -------              -------

Excess                                $24,559            $17,069             $22,105              $13,990
                                      =======            =======             =======              =======

Capital ratio                            6.47%              6.47%              12.89%               13.63%
                                         ====               ====               =====                =====
</TABLE>




                                       65

<PAGE>


NOTE 19 - PARENT COMPANY FINANCIAL INFORMATION

Condensed financial information for Patriot Bank Corp. is as follows:

    Condensed Balance Sheets


<TABLE>
<CAPTION>
                                                                         December 31,
                                                                   1997             1996
                                                                  ------          -------
                                                                       (in thousands)
<S>                                                             <C>              <C>
   Assets
   Cash and cash equivalents                                         $89              $--
   Loans to subsidiaries                                             499               --
   Investment in subsidiaries                                     66,517           53,246
   Other assets                                                        3              465
                                                                 -------          -------

      Total assets                                               $67,108          $53,711
                                                                 =======          =======

   Liabilities and stockholders' equity
      Other liabilities                                           $2,158             $594
      Trust Preferred Securities                                  18,417               --
      Stockholders' equity                                        46,533           53,117
                                                                  ------           ------

      Total liabilities and stockholders' equity                 $67,108          $53,711
                                                                 =======          =======
</TABLE>


         Condensed Statements of Income

<TABLE>
<CAPTION>

                                                                  Year ended December 31,
                                                                   1997             1996
                                                                 -------           ------
                                                                       (in thousands)
<S>                                                               <C>              <C>
      Interest income                                               $161             $824
      Other Income                                                     5               --
                                                                  ------           ------
           Total Income                                              166              824

      Interest expense                                             1,187               --
      Other Expense                                                  875              531
                                                                  ------           ------

        Total Expense                                              2,062              531

      Income (loss) before income taxes and undistributed
           earnings of subsidiaries                               (1,896)             293
      Income taxes (benefit) expense                                (527)             111
                                                                  ------           ------

      Income (loss) before undistributed earnings
           of subsidiaries                                        (1,396)             182
      Earnings of subsidiaries                                     4,742            1,793
                                                                  ------           ------

        Net income                                                $3,373           $1,975
                                                                  ======           ======
</TABLE>


                                       66
<PAGE>


NOTE 19 - PARENT COMPANY FINANCIAL INFORMATION, CONTINUED

           Condensed Statements of Cash Flows

<TABLE>
<CAPTION> 
                                                                 Year ended December 31,
                                                                   1997             1996
                                                                 -------           ------
                                                                       (in thousands)
<S>                                                              <C>               <C>
    Cash flows from operating activities
       Net income                                                 $3,373            $1,975
       Adjustments to reconcile net income to net cash
         provided by operating activities
         Earnings from subsidiaries                               (4,742)           (1,793)
         Dividends from subsidiaries                              13,615             5,000
         Change in other assets                                      462              (363)
         Change in other liabilities                               1,564               530
         MRP/ESOP Plans                                              663               390
                                                                --------           -------

            Net cash provided by operating activities             14,935             5,739
                                                                --------           -------

       Cash flows from investing activities
         Investment in subsidiary                                (17,814)          (20,581)
         Loans to subsidiary                                        (499)           18,214
                                                                --------           -------

            Net cash used in investing activities                (18,313)           (2,367)
                                                                --------           -------

       Cash flows from financing activities
          Net proceeds from trust preferred securities            18,417                --
          Cash dividends paid to stockholders                     (1,396)             (973)
          Purchase of treasury stock                             (13,554)           (2,517)
                                                                --------           -------

             Net cash provided by financing activities             3,467            (3,490)
                                                                --------           -------

    Increase (decrease) in cash and cash equivalents                  89              (118)
    Cash and cash equivalents at beginning of year                    --               118
                                                                --------           -------

    Cash and cash equivalents at end of year                    $     89           $    --
                                                                ========           =======

</TABLE>



                                       67

<PAGE>


Item 9. Change In and Disagreements with Accountants on Accounting and Financial
Disclosure

         On February 26, 1998, the Board of Directors of the Company engaged
KPMG Peat Marwick LLP as the Company's independent auditors for the fiscal year
ending December 31, 1998. The Company interviewed several independent accounting
firms before selecting KPMG Peat Marwick LLP. The decision to change the
Company's accountants was recommended by the Audit Committee of the Company's
Board of Directors.

     The Company did not have any disagreements with the Company's former
accountants on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure during the Company's last
two fiscal years or any subsequent interim period. The prior accountant's
reports on the Company's financial statements for the years ended December 31,
1996 and 1997 did not contain an adverse opinion or a disclaimer of opinion, nor
were such reports qualified or modified as to uncertainty, audit scope, or
accounting principles.

     The Company did not consult with KPMG Peat Marwick LLP on any matter during
the Company's two most recent fiscal years.

                                       68
<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

     The information relating to Directors and Executive Officers of the
Registrant is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 23, 1998.

Item 11. Executive Compensation

     The information relating to executive compensation and directors'
compensation is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 23, 1998,
excluding the Stock Performance Graph and Compensation Report.

Item 12. Security Ownership of Certain Beneficial Owners and
Management

     The information relating to security ownership of certain beneficial owners
and management is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 23, 1998.

Item 13. Certain Relationships and Related Transactions

     The information relating to certain relationships and related transactions
is incorporated herein by reference to the Registrant's Proxy Statement for the
Annual Meeting of Stockholders to be held on April 23, 1998.

                                       69

<PAGE>




                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  1. Financial Statements.

     Consolidated financial statements are omitted because the required
information is either not applicable, not required or is shown in the respective
financial statements or in the notes thereto.

     2. Financial Statement Schedules.

     Financial statement schedules are omitted because the required information
is either not applicable, not required or is shown in the respective financial
statements or in the notes thereto.

(3)  Exhibits

     (a)  The following exhibits are filed as part of this report.

     3.1   Certificate of Incorporation of the Patriot Bank Corp. (Incorporated
           by reference to Exhibit 3.1 to Patriot Bank Corp.'s Registration
           Statement No. 33-96530 on Form S-1)
     3.2   Bylaws of the Patriot Bank Corp. (Incorporated by reference to
           Exhibit 3.2 to Patriot Bank Corp.'s Registration Statement No.
           35-96530 on Form S-1.)
     10.1  Employment Agreement between Patriot Bank Corp. and Joseph W. Major
           dated May 23, 1997.***
     10.2  Employment Agreement between Patriot Bank Corp. and Gary N. Gieringer
           dated May 23, 1997.***
     10.3  Employment Agreement between Patriot Bank Corp. and Richard A. Elko
           dated May 23, 1997.***
     10.4  Charge in Control Agreement between Patriot Bank Corp. and Paulette
           A. Strunk dated May 23, 1997.***
     10.5  Change in Control Agreement between Patriot Bank Corp. and Robert G.
           Philips dated May 23, 1997.***
     10.6  Employment Agreement between Patriot Bank and Joseph W. Major dated
           May 23, 1997.***
     10.7  Employment Agreement between Gary N. Gieringer and Patriot Bank dated
           May 23, 1997.***
     10.8  Employment Agreement between Richard A. Elko and Patriot Bank dated
           May 23, 1997.***
     10.9  Change in Control Agreement between Paulette A. Strunk and Patriot
           Bank dated May 23, 1997.***
     10.10 Change in Control Agreement between Robert G. Philips and Patriot
           Bank dated May 23, 1997.***
     10.11 The Patriot Bank Corp. 1996 Stock-Based Incentive Plan. (Incorporated
           by reference to Patriot Bank Corp.'s

                                       70

<PAGE>



           Proxy Statement for the 1996 Annual Meeting of Stockholders filed
           April 26, 1996).***

     21.0  Subsidiaries.

     23.1  Consent of Grant Thornton LLP

     27.0  Financial Data Schedule

     27.1  Financial Data Schedule

     99.0  Proxy Statement for the 1998 Annual Meeting of Stockholders (filed
           herewith)

     ***   Denotes a management contract or a compensatory plan or arrangement.

(b) Reports on Form 8-K.

     None.

                                       71

<PAGE>



CONFORMED
                                   SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                                   PATRIOT BANK CORP.

                                                   By: /s/ Joseph W. Major
                                                   -----------------------------
                                                   Joseph W. Major
                                                   President and Chief Operating
                                                   Officer

DATED:  March 18, 1998

Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.

Name                           Title                    Date
----                           -----                    ----

/s/ Gary N. Gieringer   Chairman of the Board and    March 18, 1998
---------------------   Chief Executive Officer
Gary N. Gieringer       

/s/ Joseph W. Major     President and Chief          March 18, 1998
---------------------   Operating Officer
Joseph W. Major         
 
/s/ Richard A. Elko     Executive Vice President     March 18, 1998
---------------------   and Chief Financial Officer
Richard A. Elko         (Chief Accounting Officer) 
                        
                        Director                     ________, 1998
---------------------
John H. Diehl

/s/ James B. Elliott    Director                     March 18, 1998
---------------------
James B. Elliott

/s/ Leonard A. Huff     Director                     March 18, 1998
---------------------
Leonard A. Huff

/s/ Samuel N. Landis    Director                     March 18, 1998
---------------------
Samuel N. Landis

/s/ Larry V. Thren      Director                     March 18, 1998
---------------------
Larry V. Thren

                                       72